Biden’s Change To Credit Reports Will Benefit Underserved Populations

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By Center for Health Journalism

A new federal rule to keep medical debt off of credit reports should benefit women, African Americans and people with disabilities who disproportionately suffer credit hits from unpaid medical bills, reports Darreonna Davis at The 19th.  

The proposed rule from the Consumer Financial Protection Bureau would prevent credit reporting companies from sharing past or new medical or dental debt information with lenders, and block lenders from using medical information for loan decisions.  

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According to the Bureau, 15 million Americans have medical debt — averaging more than $3,000 — on their credit reports. Those living in low-income communities and in the South are more likely to suffer credit dings from medical costs.  

“Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans,” the Bureau’s director Rohit Chopra said in a press release.  

The rule is open for comments, and will take effect no earlier than 2025, reports Rob Wile at NBC News. 

Despite previous efforts to reduce medical debt on credit reports, a Kaiser Family Foundation report earlier this year found that such debt persisted and was more common in people with disabilities, Black individuals, low- and middle-income adults, and people in rural areas and the South. Women also had slightly higher rates of debt than men, which could be related to women’s lower average incomes and childbirth costs. 

“Since we know that Black adults and women are more at risk of having medical debt, then I would expect this policy would benefit those groups,” KFF vice president Cynthia Cox told The 19th. 

Vice President Kamala Harris said the change would give affected individuals an average 20-point boost to their credit ratings and could help about 22,000 more mortgages be approved every year. 

But the new rule would not address the true problem, added Eva Stahl, vice president of public policy at the nonprofit Undue Medical Debt, which is that “people don’t have access to affordable high quality health care.” 

  benefits, Biden, black adults, credit reports