White House wants to remove medical debt from credit scores. Heres why thats big deal [Video]

The Consumer Financial Protection Bureau has proposed a rule that would remove medical bills from credit reports, a ban that would prevent lenders from considering those debts when making decisions about whether to issue loans.

The proposed rule change, announced Tuesday, would also increase privacy protections, help raise credit scores and prevent debt collectors from using the credit reporting system to coerce people to pay.

“The CFPB is seeking to end the senseless practice of weaponizing the credit reporting system,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a statement. “Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans.”

If finalized, the rule would remove as much as $49 billion of medical debts that currently lower the credit scores for 15 million Americans, the bureau said.

How did we get here?

Congress in 2003 restricted lenders from obtaining or using medical …