Biden administration aims to scrub medical debt from credit scores, boosting ratings for millions

  • Comments
  • Print

U.S. Vice President Kamala Harris said Thursday that the Biden administration is taking the first steps toward removing medical bills from people’s credit scores, which could improve ratings for millions of people.

Harris said that would make it easier for them to obtain an auto loan or a home mortgage. Roughly one in five people report having medical debt. The vice president said the Consumer Financial Protection Bureau is beginning the rulemaking process to make the change.

The agency said in a statement that including medical debt in credit scores is problematic because “mistakes and inaccuracies in medical billing are common.”

“Access to health care should be a right and not a privilege,” Harris told reporters in a call to preview the action. “These measures will improve the credit scores of millions of Americans so that they will better be able to invest in their future.”

The announcement comes after a long push by the Biden administration to minimize the importance of medical debt in how people’s creditworthiness is rated. CFPB director Rohit Chopra said the credit reporting companies Equifax, TransUnion and Experian announced last March that they would stop reporting “some but not all medical bills on an individual’s credit report.”

In addition to pulling medical bills from credit reports, the proposal would prevent creditors from using medical bills when deciding on loans and stop debt collectors from using credit ratings to pressure people with health care-related debt. The government will hear feedback from small businesses and then issue a notice of a proposed rulemaking at some point next year.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

13 thoughts on “Biden administration aims to scrub medical debt from credit scores, boosting ratings for millions

    1. I know this is a joke – but it is so funny that credit scores are less than 35 years old in terms of being used for anything and we as a society live and die by them financially now… so dumb

    2. Agree this is a great idea. People shouldn’t be punished for requiring medical care that is among the most expensive in the world. At the same time our credit score system is a joke. After years of holding a half dozen credit cards that I never used or carried a balance I decided I no longer wanted them. Upon cancelling them my credit score dropped 70 pts which then triggered an increase in my home and auto insurance which for some reason ties your rates to your credit score. Also, pay off your car loan or your home mortgage and it will lower your credit score. Its a worthless system which punishes you for not holding a lot of credit.

  1. Government overreach. Credit score is done to determine someone’s ability to repay debt. If someone has large medical bills it makes it more difficult to pay back debt. It is not their fault but it is a reality. Credit Scores are used to keep lenders costs down which keeps consumers rates and costs down. If scores are manipulated it will cause higher costs and rates to all consumers.

    1. Mortgage companies do not even take medical debt into consideration for approval however it does affect the overall score

  2. All this will do is cause more bad loans to be made to people who will not be able to pay them. Revisit 2008; mass mortgage and auto loan defaults; is that the true aim? Are they still operating off the Cloward & Piven handbook?
    This is what happens when you have people running the country who couldn’t pass High School Economics… with a cheat sheet.

    1. Similar thoughts on this front, Dominic. “Those who cannot remember the past are condemned to repeat it.” George Santayana

    2. Credit scores only existed and were used for 19 years before the ’08 crisis.

      Maybe they were the cause of false confidence in the loans being given and we should just get rid of them?

  3. The billing department is the scariest part of a hospital . Medical billing coding is a corrupt process full of errors.
    When a medical bill is written off as charity care it should not get sold for Pennies on the dollar to shyster debt collectors that hound and harass the patient demanding to collect the full amount plus late penalties and court and lawyer fees and threats of law suits in corrupt courts that always rule in favor. Of their debt collector business partner .