Unpaid Medical Bills Banned from Appearing on Credit Reports Thanks to New Biden Administration Rule

Unpaid medical bills will no longer appear on credit reports, a significant change announced Tuesday by the Biden administration. The new rule, implemented by the Consumer Financial Protection Bureau (CFPB), aims to remove $49 billion in medical debt from the credit reports of over 15 million Americans, paving the way for improved access to loans and financial opportunities.

The CFPB noted that the rule would prevent lenders from factoring unpaid medical debt into decisions for mortgages, car loans, or small business loans. This change is expected to boost credit scores by an average of 20 points, potentially resulting in 22,000 additional mortgage approvals annually.

Vice President Kamala Harris celebrated the rule’s transformative potential, calling it “life-changing” for millions of families. “No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Harris said in a statement.

In addition to the credit report changes, Harris highlighted efforts by states and local governments that have used funds from a 2021 pandemic-era aid package to eliminate more than $1 billion in medical debt, benefiting over 700,000 Americans.

The CFPB first proposed the rule in fall 2023, emphasizing that medical debt is an unreliable indicator of an individual’s ability to repay loans. The three major credit reporting agencies—Experian, Equifax, and TransUnion—had already taken steps to remove medical collection debts under $500 from reports last year. The new rule expands on those efforts by targeting remaining unpaid medical bills that appear on credit reports.