Harris announced the removal of billions in unpaid medical debt from credit reports

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

The Consumer Financial Protection Bureau’s final ruling will remove $49 billion Unpaid medical bills From the credit reports of 15 million Americans.

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

“No one should be denied economic opportunity because they become ill or have a medical emergency,” Harris said. “We also made a reduction Medical debt burden By increasing tolerance and cracking down on predatory debt collection tactics.”

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The decision fulfills part of Harris’ call for states to act to reduce the burden of often prohibitive medical debt Access to credit To cover necessary living expenses.

“This will change the lives of millions of families, making it easier for them to get a car loan, home loan or small business loan,” Harris said.

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

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

While small unpaid bills no longer show up on credit reports, having a massive amount of medical debt can significantly impact a consumer’s ability to be approved for a loan, although CFPB research shows that medical bills are poor predictors of ability. The individual has to repay the loan. on.

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Although the law will remove medical debt from appearing on credit reports, debts that have not been forgiven will still need to be paid.

Those who Use credit cards To pay medical bills, those unpaid debts will still be on their report because they are not covered by the judgment.