On January 7th, the Consumer Financial Protection Bureau (CFPB) finalized a new rule that will erase $49 billion in medical debt from the credit reports of around 15 million Americans. This rule bans medical bills from being included in credit reports that lenders use and stops lenders from using medical information when making lending decisions. It aims to protect people’s privacy and prevents debt collectors from pressuring people into paying bills they may not owe. Many times, medical bills are incorrect or should have been covered by insurance, and the CFPB found that these debts do not help lenders predict if someone can repay loans.

CFPB Director Rohit Chopra said, “People who get sick shouldn’t have their financial future upended.” The rule ends a system that allowed debt collectors to misuse credit reports to collect medical debts unfairly.

Research by the CFPB shows that medical debt on credit reports often leads to unfairly denied loans, including mortgages, even for borrowers who can afford them. This rule is expected to remove billions in medical bills from credit reports, allow 22,000 more people each year to get affordable mortgages, and increase credit scores for affected Americans by about 20 points.

Source : https://bit.ly/4289WOP