With less than two weeks left until President Joe Biden leaves office, his administration announced a new rule Tuesday, Jan. 7, that could lift the credit scores of millions of Americans. The finalized rule will not only stop medical debt from being included on credit reports, it will also ban lenders from using certain medical information in loan decisions.
The rule comes despite objections from the banking and consumer data industries and will eliminate an estimated $49 billion in medical bills from the credit reports of about 15 million Americans, according to the Consumer Financial Protection Bureau.
The rule also bans lenders from using medical devices like wheelchairs or prosthetic limbs as collateral for loans and bars lenders from repossessing the devices if patients aren’t able to repay the loans.
Lenders will still be able to consider medical information in certain situations, like when the loan would be used to pay health expenses or if a person asks for a temporary postponement of loan payments for medical reasons.
Today, the CFPB finalized a rule that will remove an estimated $49 billion in medical bills remaining on the credit reports of about 15 million Americans.https://t.co/PeCoLAeQSH
— consumerfinance.gov (@CFPB) January 7, 2025
The CFPB says the measure will boost the credit scores of people with medical debt by 20 points on average. It’s also expected to lead to the approval of 22,000 additional mortgages a year.
The rule would take effect 60 days after it’s published in the federal register. However, the incoming Trump administration could undo the new rule because Congress has the opportunity to review and rescind final rules. President-elect Donald Trump is set to be inaugurated on Jan. 20.
