On Monday January 7th the CFPB finalized a new rule banning credit reports from putting medical collections on personal credit reports. The Biden Administration signed off on the new rule and is putting it in place.

I do not think this is one of the items that the Trump Administration would reverse the ban on. This is not one of the big items that Trump 2.0 is focused on so let’s hope this one flows through.

In 2023 the CFPB got a rule banning medical collections below $500 and now this rule will ban all medical debt regardless of the amount.

They estimate this will result in 22,000 additional mortgages being approved that would have otherwise been denied.

For those with medical debt on their credit they are estimating a 20-point increase in the credit score and will remove 49 billion in medical debt from the credit report from 14 million borrowers.

The CFPB states that medical debt is not a good indicator of how a borrower will pay their bills and is the reasoning behind removing these debts. Medical bills are impacting around 100 million people and medical debt has more tradelines than credit cards, utilities and auto loans so this will make a big impact in getting approvals on more loans.