WASHINGTON — The Consumer Financial Protection Bureau finalized a new rule Tuesday that bans medical bills from credit reports. 

The rule is intended to improve the credit scores of millions of Americans who have medical debt, helping them access car loans, home mortgages and small-business loans.

“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Vice President Kamala Harris said in a statement. 

Calling the rule “lifesaving for millions of families,” she noted that the Biden Administration canceled over $1 billion in medical debt for 700,000 people through the American Rescue Plan.

"It's really monumental. And the reason why it was so important to do this, even within two weeks from the end of the administration, is that it really has been a cornerstone and a focus for the Vice President," Harris' press secretary Ernie Apreza told Spectrum News on Wednesday. "Two months from now, when this begins to take effect, some folks may see their credit scores jump by about 20 points, which is, again, very significant when we think about what it means in terms of being able to access and move forward on loans that folks need."

"Our hope is that this is something that a lot of people can agree on, that no one should have to be held back just because something happened in their life that resulted in them having medical debt," Apreza added. 

CFPB research from 2022 showed medical collections appeared on 43 million credit reports; 58% of bills in collection on individuals’ credit reports were medical debts, many of them the result of emergencies.

While consumers can expect their credit scores to be affected by mortgages, auto loans or credit cards, some argue that medical debt, often from emergency room visits, is taken on unexpectedly and is also frequently subject to insurance coding errors, such as duplicate charges or fees for services that were never given.

The CFPB expects the new rule to remove medical debt from the credit reports of 15 million Americans and to raise their credit scores by an average of 20 points. 

"This is really huge for millions of consumers. Medical debt is just an unexpected and unavoidable expense," Christine Hines, the senior policy director for the National Association of Consumer Advocates, told Spectrum News. "That means it makes it much easier to qualify for a loan, to get a job, to get housing. It just makes a huge difference for people burdened with medical debt."