New CFPB Proposal Would Remove All Medical Debt From Credit Reports

Sep 23, 2023


Greetings, Got Credit? community! Today, we bring you news that could be a game-changer for the credit scores of millions of Americans. The Consumer Financial Protection Bureau (CFPB) has recently proposed a groundbreaking rule that aims to remove medical debt from credit reports. In this in-depth article, we'll explore why this proposal is monumental, how it could impact you, and what's next in the legislative process.

Why is Medical Debt Different?

Before diving into the details of the CFPB's proposal, it's essential to understand why medical debt is unlike any other form of debt. When you accumulate medical debt, it's usually not by choice. No one plans to fall ill or get injured. And yet, the consequences of medical debt can be just as severe as voluntary debts, affecting your ability to get approved for loans, mortgages, and other types of consumer credit.

The Current State of Medical Debt in America

According to a 2022 study by the CFPB, approximately 20% of U.S. households have reported medical debt. That's an alarming figure, and it shows that this is not an isolated issue but a widespread concern that impacts millions.

What's more staggering is that 43 million credit reports show medical debt collections. As of mid-2021, 58% of all bills in collections were medical bills. These statistics reveal a crisis point in how medical debt affects the financial wellness of American households.

The CFPB's Proposal: Key Points

Removing Medical Debt from Credit Reports

The CFPB proposes to prohibit consumer reporting agencies from including any medical debt and collection information on reports that would be used for underwriting loans.

Limiting Creditors' Use of Medical Debt

Under the proposed rule, lenders would be restricted from using medical debt collections when determining a borrower's creditworthiness. This change could impact how interest rates are set for car loans, home mortgages, and more.

Restricting Debt Collection Practices

The proposal aims to ban debt collectors from utilizing the credit reporting system to pressure consumers into settling "questionable" medical debts, which can often be erroneous or inflated.

Backing from the Highest Office

This proposal is not a lone initiative by the CFPB but has strong backing from the White House. Vice President Kamala Harris has explicitly supported the move, stating that these measures could significantly improve the credit scores of millions of Americans.

The Counterarguments

Despite the proposal’s merits, some argue that removing medical debt from credit reports could make credit scores less reliable. They say that even though medical debt is often not voluntary, it still represents a liability that could affect a person's ability to repay future debts.

What Happens Next?

This proposal is still in the early stages. It's subject to public comment and a formal rulemaking process, which could take upwards of a year or more to finalize. While it's too early to predict the outcome, the wheels are in motion for a significant shift in how medical debt is treated in the U.S.


The CFPB's proposal could revolutionize the credit reporting system, making it more just and equitable. While the rule has a long way to go before becoming law, it holds the promise of financial relief for millions dealing with the repercussions of medical debt.

By understanding these proposed changes, you can better prepare for potential shifts in credit reporting practices that could positively impact your financial future.

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