In a landmark move set to impact millions of Americans, the Consumer Financial Protection Bureau (CFPB) has finalized a rule to eliminate medical debt from consumer credit reports. Announced on Tuesday, the new regulation will wipe an estimated $49 billion in unpaid medical bills from the credit histories of approximately 15 million Americans.

This groundbreaking change is expected to improve borrowers’ credit scores by an average of 20 points, potentially enabling access to critical financial opportunities such as mortgages, car loans, and small-business financing.

Vice President Kamala Harris praised the rule as a transformative step toward financial equity. “No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Harris said in a statement. She initially proposed the rule in June 2024 alongside CFPB Director Rohit Chopra.

“This will be life-changing 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 added.

While major credit reporting agencies have already begun voluntarily removing medical debt from credit reports, the CFPB’s rule cements the practice into law. The regulation is scheduled to take effect in March, though it may face delays due to potential legal challenges from the debt collection industry.

Groups such as the Association of Credit and Collection Professionals have voiced opposition to the measure, arguing it could diminish accountability for unpaid bills. “This will result in reduced consequences for not paying your bills, which in turn will reduce access to credit and health care for those that need it most,” the group stated.

Despite these objections, proponents of the rule highlight its potential to provide financial relief for millions of Americans burdened by medical debt, a factor often beyond their control. The regulation marks a significant step toward mitigating the economic fallout of unexpected medical emergencies.

Source: GMA