Biden Administration Removes Medical Debt from Credit Reports, Boosting Access to Loans

In a landmark move, the Biden administration announced a final rule on Tuesday to eliminate unpaid medical bills from credit reports, a step that could positively impact millions of Americans. The Consumer Financial Protection Bureau (CFPB) stated that $49 billion in medical debt will be removed, benefiting over 15 million individuals. This change, expected to raise credit scores by an average of 20 points, could lead to the approval of 22,000 additional mortgages annually. Vice President Kamala Harris hailed the decision as “lifechanging,” highlighting its potential to ease access to home, car, and business loans.

The CFPB emphasized that medical debt is an unreliable indicator of a person’s ability to repay loans. The move follows similar actions by major credit reporting agencies—Experian, Equifax, and TransUnion—which previously removed medical collections under $500 from credit reports. The new rule extends to outstanding bills and builds on pandemic-era relief measures that eliminated over $1 billion in medical debt for 700,000 Americans.

However, the announcement comes amid political tension, with Republicans urging the administration to halt new regulations ahead of President-elect Donald Trump’s term. GOP leaders may seek to reverse the policy. Despite potential challenges, Harris stressed that the rule underscores a commitment to economic opportunity, ensuring no one faces financial barriers due to medical emergencies.

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