Medical debt is staying on American credit reports 😕

Snip-snap, snip-snap. A Biden-era rule was set to remove medical debt from US credit reports but a federal judge put it back on.

Erasing medical debt could have improved millions of people’s credit scores by about 20 points. Not always enough to bump you into an entirely new category, but a pretty big deal especially when trying to qualify for a mortgage or other important loan.

The Consumer Financial Protection Bureau (CFPB) thinks medical debt should be off credit reports since its research shows that this doesn’t predict repayment abilities. And last year, Experian, Equifax, and TransUnion (the three national credit reporting agencies in the U.S.) announced plans to take medical collections bills under $500 off credit reports. The CFPB was also expected to ban all medical debt from showing up on credit reports and ban lenders from factoring that into their decisions.

If that held up, it’d have cleared $49 million in debt from American credit reports. 1 in 5 Americans have a medical debt collection account on their credit report and over half of all credit report collection entries are medical.

That was a big deal but sadly, the rule’s been removed.

Between this, the possibility of BNPL debt being added to credit scores, and reduced student loan relief, it really looks like the American populus won’t be getting a break anytime soon. Meaning it’s so crucial to get nimble and make abnormal moves to strengthen and protect yourself financially.

P.S., Here’s a not so fun fact: medical debt was the first personal debt that yours truly incurred.