The Biden administration is proposing to remove medical debt completely from consumer credit reports.
The Biden administration wants to remove medical debt completely from consumer credit reports, so the Consumer Financial Protection Bureau on Thursday outlined its proposed rules to keep unpaid medical bills from affecting patient’s credit scores.
One in 5 Americans have medical debt on their credit reports, according to the CFPB. Medical debt can lead to a debt spiral for some consumers and narrow their options for housing, loans and credit cards.
« We know credit scores determine whether a person can have economic health and wealth, » said Vice President Kamala Harris. « Credit scores determine whether a person can buy a home, whether they can buy a car, rent an apartment, or own a small business. »
Medical debt is the most common debt in collection. The CFPB found that 58% of all third-party debt collection on consumer credit reports was for medical bills. The complexity of medical billing also makes it prone to errors. One study from the Medical Billing Advocates of America estimates up to 80% of medical bills have mistakes.
