Government bans from medical debt from your credit report

News ain’t always sexy but still very relevant to many.

Did you know….

According to the Consumer Financial Protection Bureau (CFPB), there is over $88 billion in outstanding medical bills currently in collections across the nation—a number that has significant financial repercussions for many Americans. Nationally, around 1 in 5 adults carry medical debt.

How it affects us….

In many cases, the negative credit reporting of medical debt prevents consumers from qualifying for housing, home loans, and even certain job opportunities. Medical debt can damage credit scores, limiting access to financial opportunities and creating additional stress for consumers.

What’s being done about it….

The three major credit bureaus—Equifax, Experian, and TransUnion—have implemented new policies to ease the burden of medical debt on credit reports.
California passed SB 1276, which ensures that medical debts will no longer be reported on consumer credit reports. This state law takes effect on January 1, 2025
The Consumer Financial Protection Bureau (CFPB) issued new regulations on January 7, 2025, prohibiting the inclusion of medical debts on credit reports and barring lenders from considering medical information when assessing borrowers.

Why it matters….

The effects of these changes could have a substantial positive impact on many consumers. Here’s how:

Improved Credit Scores: The removal of medical debt may give credit scores a noticeable boost, opening the door to better financial opportunities.
Easier Loan Approvals: Whether you’re planning to buy a home, refinance, or secure a personal loan, improved credit scores can increase your chances of approval.
Better Loan Terms: Higher credit scores often translate into lower interest rates and more favorable loan terms, saving you money in the long run.
Reduced Stress: Knowing that medical debt is no longer holding you back can bring peace of mind and renewed confidence in achieving your financial goals.

If medical debt has been dragging your credit score down and preventing you from looking into a home loan or refinance, let’s put you in touch with one of our lenders and see if now is your time to reconsider!

Reach out now and let’s have a chat.

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