The new CFPB rule, which eliminates medical debt from credit reports, is designed to prevent financial hardships from impacting individuals' loan eligibility, particularly affecting mortgage approvals.
CFPB Director Rohit Chopra stated that the agency aims to stop the abusive practices of debt collectors who manipulate the credit system to force payments on potentially unowed medical bills.
The regulation is projected to remove $49 billion of medical debt from the credit reports of 15 million Americans, improving overall access to credit.
According to the CFPB, medical debt is a poor indicator of someone's ability to repay loans, which has led to mortgage denials that should not occur.
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