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New Rule Shields Americans from Medical Debt Impact on Credit Scores

New Rule Shields Americans from Medical Debt Impact on Credit Scores

A recent rule finalized by the Consumer Financial Protection Bureau (CFPB) has transformed the landscape of medical debt in America by prohibiting credit reporting agencies from factoring medical debt into credit scores. This significant change is expected to benefit approximately 15 million Americans, wiping out an estimated $49 billion in medical bills from credit reports. The CFPB aims to alleviate the financial burden on individuals who face medical debt due to unavoidable health issues or erroneous charges. The rule not only protects consumers from having their credit scores negatively impacted by medical bills but also prevents lenders from using medical information, such as the presence of medical devices, as collateral for loans. This initiative is part of a broader effort by the Biden administration to tackle medical debt and improve access to affordable healthcare. While some opposition is anticipated from congressional Republicans and the collections industry, the rule represents a crucial step toward financial relief for those affected by medical expenses.

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