Black Voices

New Federal Rule Bans Medical Debt From Credit Reports. Some Industry Groups Are Suing


The Consumer Financial Protection Bureau recently announced its plan to erase medical debt from Americans’ credit reports, a move expected to remove $49 billion in debt from the credit histories of approximately 15 million people. While advocates argue the change will provide great financial relief to millions struggling with high health care costs, critics contend it could harm financial systems and incentivize delinquency.

Under the rule, which amends Regulation V of the Fair Credit Reporting Act, medical debt will no longer appear on credit reports, a shift aimed at increasing consumer privacy and preventing debt collectors from leveraging the credit system to force payments.

The bureau also cites data showing medical debt as a poor predictor of borrowers’ ability to repay other types of loans.

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“Medical debt is not a debt of choice, it’s a debt of necessity,” said Eva Stahl, vice president of policy and programs at the nonprofit Undue Medical Debt. “The issue of credit is one that hangs over people along with a lot of anxiety and mental stress.”

Americans with medical debt on their credit reports could see credit scores increase by an average of 20 points, potentially paving the way for 22,000 additional affordable mortgages every year.

Black Americans disproportionately bear the brunt of medical debt.

“80% of medical debt is held by households with little to no net worth,” said Anthony Barr, director of research and impact at the National Bankers Association, citing a 2021 Brookings report. Barr also cited a 2024 Color of Wealth study that found 29% of Black households in Chicago have medical debt versus 18% of their White counterparts.

The initiative faces opposition. The Consumer Data Industry Association, representing major credit bureaus like TransUnion, Experian and Equifax, along with ACA International, a debt collectors’ trade group, has filed a lawsuit in federal court. They argue the Consumer Financial Protection Bureau lacks authority to implement the ban and claim it violates the Fair Credit Reporting Act.

Critics like House Financial Services Committee Chairman French Hill warn the rule could have unintended consequences for the same individuals the bureau vows to help. In a statement, Hill argued that it would “drive up costs for any American seeking medical care and have a devastating impact on consumers’ access to healthcare, particularly in rural areas.”


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