Since when does being sick mean you won’t pay your bills?? That’s like saying you can’t do math because you’ve got a dog - one thing has nothing to do with the other! But for some strange reason, the credit bureaus made that connection about medical debt for years. That train is off the rails now, and we’re here for it! Let’s see what’s up, and what the results might be!
Here are Five Fast Facts on medical debts and credit history:
- 💨 Disappearing Debt - The Consumer Financial Protection Bureau (CFPB) recently inked a new set of rules for how lenders view medical debt when it comes to getting loans. Good news - they won’t! This little detail will no longer show up on credit reports, and lenders can’t use it when deciding if they should loan the applicant money or not.
- 🤝 Follow Up - These new rules are the result of the three big credit bureaus – Equifax, Experian, and TransUnion – removing medical debts less than $500 from credit reports back in 2023. Chump change doesn’t count.
- 🤯 Big Impact - This decision is huge for lots of folks - around 15 million, in fact! After all, medical debt is the #1 cause of bankruptcy in America.
- 🙈 Technically Speaking - Teeeechnically speaking, lenders can look at medical debt when considering loans specifically for medical purposes, like forbearance or verifying a loan for healthcare expenses. Otherwise, it’s a no fly zone.
- 📈 Upsie Daisy - When this kicks in, people who have their medical debts removed will probably see a credit score bump of around 20 points! It should take effect 60 days after publication in the Federal Register, so at the normal pace of government that’ll probably be around 2027…
🔥Bottom line: This seems like really good news, especially for people who’ve already had tremendous struggles with their health, or the health of loved ones! After all, why should something completely out of your control impact your ability to get loans or other financial assistance to pay for that thing? It doesn’t make sense, and this should be a great relief to millions of Paychecks around the country.
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