January 7, 2025
If you are one of the 15 million Americans dealing with almost $50 billion in medical debt that debt could soon be wiped off your credit report. But the Trump administration may change the game.
First – let me explain what just happened. The Consumer Financial Protection Bureau finalized a medical debt rule that I first told you about over the summer.
There are two very important things you need to know about that rule. One — it takes effect in 60 days. It’s not in effect yet. And Trump may derail it all together – I’ll explain why in a second. And two – most importantly – if this rule does take effect in 60 days — it does not eliminate your medical debt. You will still have to pay it. This rule just removes the debt from your credit report.
The rule not only bans the inclusion of medical bills on credit reports it also prohibits lenders from using medical information in their lending decisions. The Consumer Financial Protection Bureau says the rule will increase privacy protections and will prevent debt collectors from using the credit reporting system to coerce people to pay bills they don’t owe.
So why does that matter? Well the CFPB says — by removing this debt from the reports, it will increase the credit scores of these Americans who then can secure loans and mortgages. The Consumer Financial Protection Bureau says research has shown that medical debt is not a good indicator about a borrower’s ability to repay other debts. People get sick and insurance companies make mistakes on bills and none of that – according to the CFPB is your fault. In fact, by banning this medical debt from credit reports, the government predicts people could see a jump of –as much as — 20 points in their credit scores.
So if you have this kind of medical debt what do you need to do? Nothing – if the rule takes effect that medical debt should just fall off your credit report. However! Now that the Trump administration is coming into office, the president-elect has said he is going to roll back all of the Biden administration regulations. Well, this medical debt rule is a Biden administration regulation that could be cut. On top of that House Republicans have expressed serious concerns about this regulation and they say removing the medical debt from reports is not fair to other consumers and it weakens the accuracy and completion of the credit report.
Now – as I reported over the summer back in 2022 the three main credit bureaus TransUnion, Equifax and Experian already pledged to remove certain types of medical debt from credit reports. Not all but some. So it’s already happening but not to the degree that this new rule would require.
Read more about the rule from the CFPB here.
Read more about the rule from the White House here.
