The Biden administration announced a new rule on Tuesday that will block unpaid medical bills from appearing on credit reports, where they have previously impacted the ability people have to borrow money.
The rule comes from the Consumer Financial Protection Bureau, which shared on Tuesday that $49 billion in medical debt will be removed from the credit reports of more than 15 million Americans.
Because of the new rule, lenders will no longer be able to use medical debt as a deciding factor when issuing loans.
The new rule is expected to raise credit scores for Americans by an average of 20 points and could lead to 22,000 additional mortgages being approved yearly, the bureau shared.
Vice President Kamala Harris has shared a statement on the new rule, describing it as “life-changing” for millions of families.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” she said.
In her statement, the vice president also said that states and local governments have used a 2021 pandemic-era aid package to help eliminate medical debt for more than 700,000 Americans, totaling more than $1 billion in relief.
The bureau shared that medical debt is not a good predictor of someone’s ability to repay a loan.
The three national credit reporting agencies appeared to agree to some extent, as last year Experian, Equifax, and TransUnion said they would remove medical collections debt under $500 from US consumer reports.