New rule will remove medical debt from thousands of Arizonans’ credit reports
Jan 7, 2025, 6:00 PM
PHOENIX — A new rule announced Tuesday will remove medical debt from thousands of Arizonans’ credit scores, a move Vice President Kamala Harris said would be “life changing.”
The Consumer Financial Protection Bureau (CFPB) rule will remove $49 billion in medical debt from the credit reports of more than 15 million Americans, including about 460,000 in Arizona.
The change is estimated to raise credit scores by an average of 20 points and could lead to 22,000 additional mortgages in the country being approved every year, according to the bureau.
“For too long, credit scores impacted by medical debt have forced Arizonans to make sacrifices – like forgoing home ownership, starting a business or continuing their education,” DNC Deputy Communications Director Abhi Rahman said in a statement.
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“Today’s ruling from the CFPB to eliminate medical debt from credit reports is a historic step forward in this fight.”
The administration announced plans for the rule in fall 2023.
The CFPB said that medical debt is a poor predictor of an individual’s ability to repay a loan. Experian, Equifax and TransUnion, the three national credit reporting agencies, said last year that they were removing medical collections debt under $500 from U.S. consumer credit reports.
The new rule from the Biden administration is set to take on the outstanding bills appearing on credit reports.
The Associated Press contributed to this report.
