New York Law Removes Medical Debt from Credit Reports

By Consumers for Quality Care, on January 10, 2024

Recent legislation signed into law by Governor Kathy Hochul now prohibits medical debt from being included on consumer credit reports for New York residents, as reported by The Associated Press.

When debt is included in a credit report, it hurts credit scores, limiting consumers’ access to credit and hurting their overall financial well-being. The new law signed by Hochul is expected bring immediate relief to an estimated 744,000 New Yorkers, especially to low-income New Yorkers and New Yorkers of color, who are disproportionally affected by medical debt.

During the bill signing ceremony, Governor Hochul said that this law would lessen the financial harm of carrying medical debt. “Medical debt is such a vicious cycle. It truly hits low-income earners, but it forces them to stay low-income earners because they can’t never get out from under it,” said Governor Hochul. “No one should ever have to make a horrible choice between their physical health and their financial health.”

New York is the second state after Colorado to enact legislation aimed at reforming credit reporting. The Consumer Financial Protection Bureau (CFPB) recently began the rule making process to drop medical debt from credit reports for all Americans. In 2022, the three major national reporting agencies agreed not to report medical debts under $500.

CQC applauds these efforts and urges more collaboration from both public and private entities to find ways to address the burden of medical debt on millions of Americans.