Biden Plan To Scrub Medical Debt From Credit Scores Could Raise Ratings For Millions

WASHINGTON (AP) — 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 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.