The Consumer Financial Protection Bureau says the change will eliminate $49 billion in medical debt from credit reports.
Consumers in the United States will no longer list medical debt on their credit reports under changes that make it easier for millions of Americans to get credit.
The new rule means lenders will be prohibited from using medical information in making credit decisions, the Consumer Financial Protection Bureau (CFPB) said Tuesday.
The change will remove an estimated $49 billion in medical debt from the credit reports of more than 15 million Americans, according to the CFPB.
The consumer protection agency said its research has shown that medical debt is a poor indicator of whether a loan will be repaid, and it expects this change will result in the approval of about 22,000 additional mortgages each year.
“People getting sick should not have their financial future upended,” CFPB Director Rohit Chopra said in a statement.
“The CFPB’s final rule closes a special exclusion that has allowed debt collectors to abuse the credit reporting system to force people to pay medical bills they may not even owe.”
US Vice President Kamala Harris said the rule would “help more Americans save money, build wealth and prosper.”
The move comes less than two weeks before US President Joe Biden is set to hand control of the White House to US President-elect Donald Trump.
It’s unclear whether the rule, which takes 60 days to take effect, will survive in its current form under Trump, who has promised to cut government regulations and roll back much of Biden’s agenda.
Several Republicans expressed concerns that the proposed change would affect the accuracy of credit reports.
The Consumer Data Industry Association and other trade groups representing financial institutions opposed the change, while the American Medical Association supported the measure.
