Understanding the New CFPB Rule: What It Means for Medical Debt and Your Credit Score 

In the United States, medical debt and credit scores have long been linked, making it harder for many to achieve their financial goals. Recently, however, significant changes have been introduced that may improve your credit score and overall financial health. 

Changes to Medical Debt Reporting 

For years, unpaid medical bills have appeared on credit reports and negatively affected credit scores. Until recently, around 15 million people carried medical debt on their credit reports. A few years ago, changes were made to lessen this burden: 

• Paid Medical Collections: These are no longer reported on credit reports. 

• Small Medical Collections: Medical collections under $500 have been removed from credit reports. 

• No Surprises Act: This act protects consumers from unexpected bills for emergency services. 

A Groundbreaking New Rule 

On January 7th, the Biden administration, through the Consumer Financial Protection Bureau (CFPB), introduced a new rule that takes these improvements even further. Here’s what this rule does: 

• Removal of Medical Debt: Medical debt is removed entirely from credit reports. 

• Lender Restrictions: Lenders are now prohibited from using medical information in their decision-making process. 

This rule is a major win for over 15 million Americans. On average, people can expect to see a boost of 20 points in their credit scores, a change that can make a big difference in financial opportunities. 

Why This Change Matters 

Medical debt has long been viewed as an unreliable indicator of someone’s ability to repay other loans. With the new rule, your credit score will now reflect a truer picture of your financial health, free from the burden of medical bills that may have been covered by insurance or assistance programs. 

This change not only benefits your credit score but also strengthens your privacy protections. Debt collectors can no longer use credit reports to pressure you into paying bills you might not owe. 

How Colorado Lending Team Can Help 

At Colorado Lending Team, we understand that your financial health is important to your journey toward homeownership. Whether these changes remain, or new challenges arise, our team is here to help. We work with you every step of the way to explore your mortgage options and guide you toward achieving your homeownership goals. 

If you’re wondering how these changes might impact your credit score or your ability to get a mortgage, we’re ready to help you navigate the process. Your financial future is important, and with the right guidance, a boost in your credit score could bring you closer to the home you’ve always dreamed of. 

Take the Next Step 

Stay informed and take control of your financial health. Contact us at Colorado Lending Team today to discuss how the new CFPB rule might benefit you and to explore your mortgage options. Your journey to homeownership begins with a single step, and we’re here to guide you along the way.