New Rule to Remove Medical Debt from Credit Reports for Thousands of Arizonans
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New Rule to Remove Medical Debt from Credit Reports for Thousands of Arizonans

Consumer Financial Protection Bureau Initiative to Impact 460,000 in Arizona, Boost Credit Scores Nationwide

PHOENIX — A new rule announced Tuesday by the Consumer Financial Protection Bureau (CFPB) will remove medical debt from credit reports, benefiting thousands of Arizonans and millions across the country.

The rule, which eliminates $49 billion in medical debt from credit reports nationwide, is expected to positively impact 460,000 residents in Arizona. Vice President Kamala Harris hailed the change as “life-changing,” noting its potential to improve financial opportunities for affected individuals.

Expected Impact

The CFPB estimates the rule will raise credit scores by an average of 20 points, potentially enabling an additional 22,000 mortgage approvals annually nationwide.

“For too long, credit scores impacted by medical debt have forced Arizonans to make sacrifices—like forgoing home ownership, starting a business, or continuing their education,” said DNC Deputy Communications Director Abhi Rahman.

Background on Medical Debt Reform

The CFPB had previously identified medical debt as a poor predictor of loan repayment ability. Last year, the three major credit reporting agencies—Experian, Equifax, and TransUnion—announced they would remove medical collections debt under $500 from consumer credit reports.

This new rule from the Biden administration expands on that effort, addressing larger outstanding medical debts that currently appear on credit reports.

A Step Toward Financial Equity

The CFPB’s initiative reflects a broader effort to ensure financial systems do not unfairly penalize individuals for medical expenses, which are often unforeseen.

“Today’s ruling from the CFPB to eliminate medical debt from credit reports is a historic step forward in this fight,” Rahman said.

The rule, first announced in fall 2023, marks a significant shift in how medical debt is handled within the credit reporting system, offering relief and new opportunities for millions of Americans.