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Harris announces ruling removing billions in medical debt from credit reports

Vice President Harris announced a final ruling by the Consumer Financial Protection Bureau to remove $49 billion in unpaid medical debt from consumer credit reports.

Vice President Kamala Harris announced Tuesday that Americans will no longer be penalized for medical debt on credit reports.

The final ruling by the Consumer Financial Protection Bureau will remove $49 billion in unpaid medical bills from the credit reports of 15 million Americans.

Harris also said a handful of states and localities have leveraged American Rescue Plan (ARP) funds to support the elimination of over $1 billion in medical debt for more than 700,000 Americans.

"No one should be denied economic opportunity because they got sick or experienced a medical emergency," Harris said, in part. "We also reduced the burden of medical debt by increasing pathways to forgiveness and cracking down on predatory debt collection tactics."

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The decision fulfills part of Harris' call to action for states to reduce the burden of medical debt that often prohibits access to credit for essential living expenses.

"This will be lifechanging for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan," Harris said.

The CFPB ruling is expected to raise the credit scores of those affected by an estimated average of 20 points and lead to the approval of approximately 22,000 additional mortgages every year.

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The three largest credit reporting agencies, Experian, TransUnion and Equifax, announced in March 2022 that they will no longer include unpaid medical debts less than a year old and medical debt under $500 on credit reports.

While smaller unpaid bills no longer show up on credit reports, having a massive amount of medical debt can greatly impact a consumer's ability to be approved for a loan, even though CFPB’s research shows medical bills are poor predictors of an individual’s ability to pay a loan off.

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Although the act will eliminate medical debt from showing up on credit reports, the debts that are not relieved will still need to be paid.

Those who use credit cards to pay medical bills will still see those unpaid debts on their report as they are not covered by the ruling.

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