Medical debt banned from credit reports by new Biden administration rule

Unpaid medical bills will no longer appear on credit reports, where they can block people from getting mortgages, car loans or small business loans, according to a final rule announced Tuesday by the Biden administration.

The Consumer Financial Protection Bureau rule will remove $49 billion in medical debt from the credit reports of more than 15 million Americans, according to the bureau, which means lenders will no longer be able to take that into consideration when deciding whether to issue a loan.

The change is estimated to raise the credit scores by an average of 20 points and could lead to 22,000 additional mortgages being approved every year, according to the bureau.