The Biden Administration has set a new rule for the credit reporting agencies. The rule is that medical accounts do not get posted on credit reports, so any that show up there now, must be deleted.
This is expected to raise the credit score for millions of people, anywhere from 10 to 20 to 50 points, depending on their overall credit profile.
The idea behind the rule is that medical bills are not indicative of a person’s credit. A person could pay all their credit cards and loans perfectly, but then get hit with a giant medical emergency. That ginormous medical bill — which they are unable to pay — is not predictive of how they handle their finances. Therefore, it should not be on their credit report.
However…
the rule is not set to go into effect until spring. And meanwhile, the Biden Administration will be replaced with the Trump Administration. This means the Trump Administration could possibly overturn the new rule before it goes into effect.
Why might the Trump Administration do such a thing?! Here’s why…
Not everyone is thrilled with the new rule. Many credit card companies are saying that the removal of medical obligations from credit reports will cause people to say, “Woo-hoo! I’m free of that so now I can go on a spending spree. Now I can charge up my cards! Now I can buy a new SUV!”
They’re afraid people will not manage their finances wisely, get themselves into too much debt, and then default on their credit card bills. Then the credit card companies would lose money, and we all know how they feel about money –!
So there is pressure on the new Administration to stop the rule. Will Trump stop it or let it go throough?
Time will tell. But in the meantime, don’t be shocked if your credit card company suddenly lowers your limit!!! They might do so now as a so-called protection.
And whatever you do, keep hammering away at the medical bill and DO NOT use this as an occasion to go out and pile on the debt! Be smart, be wise, and work toward living debt-free.
Carolyn, Just FYI, I received a $60.00 check in the mail today from the CONSUMER FINANCIAL PROTECTION BUREAU. It represents my portion that they got resulting from a LONG lawsuit against Lexington Law. Lexington Law was a scam, and the lawyer(s) running it. I did not even know the process was ongoing, just that they had dropped out of business. For more direct information: 800-680-8991 and/or http://www.cfpb-lexlaw.org
Happy New Year !
Tom Herron
Congratulations, Tom, on getting a $60 check from the CFPB! That is great news! I am pleased to know that Lexington Law is having to pay for their shady business practices. Thank you for letting me know.
Great Information.