President Joe Biden's administration has banned the inclusion of medical debt on credit reports, a move that could benefit 15 million Americans by removing $49 billion in unpaid medical bills from their records.
Vice President Kamala Harris announced the new rule in a White House statement, and said the Consumer Financial Protection Bureau (CFPB) will expunge medical debt that's negatively effecting consumers' credit ratings score.
The move reflects the Biden administration's efforts to deliver economic relief to American families who are experiencing financial crisis.
"No one should be denied economic opportunity because they got sick or experienced a medical emergency," Harris said. "That is why President Biden and I cancelled over $1 billion in medical debt – part of our overall plan to forgive $7 billion by 2026 – with support from our American Rescue Plan."
According to the White House, medical debt makes up the majority of debt in the United States, more so than car loans, utilities, and credit cards.
State officials have leveraged funds from the American Rescue Plan to cover over $1 billion in medical debt for nearly 700,000 Americans.
Biden's new ban is expected to raise credit scores by an average of 20 points, potentially granting access to a mortgage loan to 22,000 individuals who were previously ineligible due to their credit score, reported the Guardian UK.
While the Biden administration determined that medical debt is not a credible indicator of borrowers' ability to repay loans, the ban could be overturned by president-elect Donald Trump once he starts his second term.
