Biden Administration Aims to Remove Medical Debt from Credit Reports 

By Consumers for Quality Care, on July 8, 2024

The Biden administration is working to drop medical debt from consumers’ credit reports, according to The Wall Street Journal and Axios. 

Currently, 15 million consumers carry nearly $50 billion in medical debt on their credit reports. According to the Consumer Financial Protection Bureau (CFPB), this rule change would instantly raise credit scores by an average of 20 points for millions of Americans, resulting in an increase of 22,000 approvals each year for home mortgages.  

CFPB Director Rohit Chopra argues that this type of debt is not a reliable indicator of whether a consumer has the ability to repay a loan and should therefore be eliminated. “Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans,” said Chopra. 

About 1 in 12 U.S. adults have some form of medical debt, a problem that disproportionally affects people of color, and is worsened by hospitals’ engaging in predatory debt collection practices.  

Two states, Colorado and New York, have enacted legislation aimed at reforming credit reporting, and in 2022, the three major national reporting agencies agreed not to report medical debts under $500. 

CQC applauds these efforts and urges policymakers do more to address the burden of medical debt on millions of Americans.