Biden administration proposes banning medical debt from credit reports

In its latest effort to minimize the impact of medical debt on consumers, the Biden administration proposed Tuesday banning such debt from credit reports.

In its latest effort to minimize the impact of medical debt on consumers, the Biden administration proposed Tuesday banning such debt from credit reports. The move would remove medical debt from the credit reports of more than 15 million Americans, which would raise their credit scores by an average of 20 points and lead to the approval of about 22,000 more mortgages annually, according to a fact sheet from the office of Vice President Kamala Harris. Some 46 million people had medical debt listed on their credit reports in 2020, according to the fact sheet. The Consumer Financial Protection Bureau has been considering proposals since last fall that would spare millions of Americans with unpaid medical bills from having that debt show up on credit reports. Creditors, who use these reports to make underwriting decisions when people apply for mortgages, car loans and other debt, would be able to use only nonmedical information in their evaluations. Also, debt collectors would no longer be able to use the listing of medical debt on credit reports as leverage to pressure consumers into paying questionable bills. Harris also called on states, localities and health care providers to take additional steps to eliminate medical debt, noting that $7 billion in American Rescue Plan Act funds are being used to wipe out the debt of up to nearly 3 million people by the end of 2026. Also, she asked them to expand access to charity care to minimize the accumulation of debt and to protect patients from aggressive debt collectors.