Introduction
A new report suggests that many Tennesseeans could see higher credit scores if a rule proposed by the Consumer Financial Protection Bureau (CFPB) goes into effect. This proposal aims to remove medical bills from credit reports, potentially improving credit scores for millions of individuals.
The Current Situation
Tennessee is among the states with the highest share of adults burdened by medical debt, with just over 17% of the population affected. Kiren Gopal, a senior counsel with the CFPB, explained that the rule would prevent lenders from considering medical bills when making credit decisions, such as for car loans or small-business loans.
Impact of Medical Debt
Currently, approximately 15 million Americans have nearly $50 billion in outstanding medical bills on their credit reports, which can hinder their access to essential life opportunities, such as purchasing a home. Gopal noted that if the new rule is enacted, individuals with medical debt on their credit reports could see their credit scores rise by an average of 20 points.
Future Prospects
The CFPB is accepting public comments on the proposal until August 12th, with plans for a final rule to be implemented in 2025. Gopal highlighted that research from last year indicated that Tennessee residents are significantly more likely to have a medical collection listed on their credit reports compared to the national average.
Conclusion
Overall, the proposed changes could lead to approximately 22,000 additional home mortgage applications being approved each year, providing a much-needed boost for those struggling with medical debt.
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