credit report

There is never a good time to fall sick. One cannot plan for the bills that will arrive consequent to a hospitalization or a treatment – for yourself or for a loved one. Rich or poor, of means or not, medical debt can weigh heavily on a family’s overall wellbeing, taking control of their lives in ways one may not even imagine. But there’s hope – the outgoing Biden administration has finalized a rule that’ll prevent credit agencies from including medical debt in credit reports; additionally, lenders will be barred from considering certain medical information in their assessments when making lending decisions.  

The rule, proposed by the Consumer Financial Protection Bureau in June 2024, is expected to clear medical bills from credit reports of about 15 million people. Consider this statistic from a poll conducted by the Kaiser Family Foundation: 41% of adults owe money to either family members or their credit card company because they are unable to cover their medical bills. The same poll found what patient advocacy groups have known for the longest time: those with medical debt compromise spending on food, mortgage payments, and household items; they dip into their savings or borrow and take on even more debt. Some patients compromise on their health – canceling doctor’s appointments, not refilling their prescription meds, or skimping on their treatment – to reduce spending.

Family members are often left with medical debt of their loved ones who may have passed. Compounding interest, increasing debt, and damage to credit history raises further unsurmountable barriers that are difficult to break through and can have broader consequences, such as the ability to seek a student loan for college. And those most vulnerable among us – low-income, marginalized, uninsured or underinsured – are at greatest risk.

Social service and community-based non-profits provide interventions to support families in a myriad ways: negotiating to reduce the debt; providing financial assistance; or providing wrap-around services for the entire family such as childcare, transportation, access to meals or a food pantry, etc.

However, breaking this cycle is important, and hopefully, the incoming administration will not challenge this incredible development.