The Biden administration on Thursday announced plans to remove medical bills from Americans’ credit reports in a push to end what it called coercive debt collection tactics that affect millions of consumers.
Proposals under consideration would help families financially recover from medical crises, stop debt collectors from coercing people into paying bills they may not even owe, and ensure that creditors are not relying on data that is often plagued with inaccuracies and mistakes, Vice President Kamala Harris and Rohit Chopra, the top consumer finance watchdog, announced.
Harris told reporters that more than 100 million Americans had unpaid medical debt.
“Many of the debts people have accrued are due to medical emergencies,” she said. “We know credit scores determine whether a person can have economic health and wellbeing, much less the ability to grow their wealth.”
Chopra’s agency, the Consumer Financial Protection Bureau, reported last year that roughly 20% of Americans have medical debt, but CFPB said its data also showed medical billing data is a poor indicator of whether consumers’ are likely to pay down traditional debts.
The Brookings Institution think tank also found big gaps in medical debt statistics, with some 80% of debt held by households with zero or negative net worth, and communities of color hit especially hard. For instance, 27% of Black households hold medical debt compared with 16.8% of non-Black households.
According to the CFPB, the Fair Credit Reporting Act restricts the use of medical information in credit decisions and credit reports. The agency on Thursday announced policy outlines that could give rise to new regulations.
Credit scores are often required for things that don’t necessarily incur debit — it can be a requirement for renting, and for credit cards (which, if paid off monthly, don’t accumulate debt).
The credit system is far from perfect, but this is a step in the right direction it seems; I view it as a statement on “healthcare as a right,” rather than as “good credit scores as a right.”
Exactly this.
I think the credit score system is a blight on society.
But not being able to rent a home cause you went to the emergency room and racked up 150k in debt that you can never pay off thus seeing your score collapse in on itself will always be bullshit of the highest order.
This is definitely a step in the right direction.
Yeah I mean… credit score is getting quite close to the China social credit score… as in used for everything and see if you are worth.