Biden Administration Ends Medical Debt on Credit Reports

The Biden administration announced a final rule on Tuesday that will remove unpaid medical bills from credit reports, benefiting over 15 million Americans. The Consumer Financial Protection Bureau (CFPB) estimates the change will erase $49 billion in medical debt and boost credit scores by an average of 20 points, potentially enabling 22,000 additional mortgages annually.

Vice President Kamala Harris called the rule “lifechanging,” emphasizing that financial opportunities shouldn’t be denied due to illness or medical emergencies. Harris also highlighted efforts by state and local governments, using pandemic-era aid to erase over $1 billion in medical debt for 700,000 Americans.

The CFPB argued that medical debt is an unreliable predictor of creditworthiness. Major credit reporting agencies had already removed medical collections under $500, but this rule addresses larger outstanding bills still appearing on credit reports.