Proposal would remove medical debt from credit
CFPB: 15 million Americans have medical debt on their credit report
(InvestigateTV) — The Consumer Financial Protection Bureau (CFPB) is proposing a new rule that would prevent credit reporting agencies from sharing medical debt information with lenders.
If adopted, 15 million Americans with a collective of $49 billion in medical debt on their reports could see a 20-point rise in their credit scores, according to the agency.
Elizabeth Renter with NerdWallet looked over the proposal and said the people most likely to be impacted by this new rule, should it take effect, are those carrying the highest typical medical debt.
“This includes people who have gone periods throughout the year without health insurance. People who had a hospital stay and people who have high ongoing expenses like those living with a chronic illness,” Renter shared. “You know the CFPB recognizes that people don’t often take on medical debt by choice. This isn’t like taking out a car loan, something happens in your life. You have to go to the hospital and there’s a bill that results from that.”
NerdWallet recommends those having a hard time keeping up with bills to reach out to medical providers.
“By reaching out to them and being frank about what you can afford each month, you might find they are willing to work out a payment arrangement that’s more easy to tolerate,” she noted. “In some cases, if you’re able to make a large payment, they could even be willing to negotiate on the total amount that you owe.”
Renter said medical debt can impact credit scores when trying to qualify for a home or car loan, as well as credit cards. So, tackling medical debt when possible is key.
This is just a proposed rule. If it’s finalized by the CFPB that likely wouldn’t happen until sometime next year.
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