A recent rule finalized by the Consumer Financial Protection Bureau (CFPB) will prevent outstanding medical debt from affecting Americans' credit scores. This significant change is expected to remove approximately $49 billion in medical bills from the credit reports of around 15 million individuals, thereby improving their access to credit cards, loans, and job opportunities. The CFPB highlights that medical debt often arises from unavoidable circumstances or billing errors, which can unfairly penalize patients. The new regulation also prohibits lenders from using medical information, such as details about medical devices, as collateral for loans. Despite previous efforts by credit reporting agencies to exclude certain medical debts, many Americans still faced negative credit impacts. This rule is part of broader initiatives aimed at enhancing medical debt forgiveness and reducing predatory debt collection practices. However, it may face challenges from congressional Republicans and the collections industry.
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