More than one in five Americans has medical debt on their credit report, and in January 2025, the Consumer Financial Protection Bureau (CFPB) finalized a landmark rule to remove an estimated $49 billion in such debt from the records of 15 million people. The idea is simple: Unpaid medical bills often stem from emergencies, not financial actions, and therefore shouldn’t lower your credit score. But by July 2025, a federal court in Texas overturned that rule, saying the agency had exceeded its authority. If you’re saddled with medical bills, this fight could affect whether and when those debts disappear from your report and how lenders treat you next.
What the rule promises—and why it matters
The CFPB rule would prevent consumer credit reporting agencies (CRAs) from including unpaid medical bills on credit reports or allowing lenders to use them in lending decisions. The agency estimates that those affected could see their credit scores improve by an average of 20 percentage points and could be approved for about 22,000 additional mortgages each year. The rule recognizes that medical debt is often caused by the cost of care, billing errors or coverage gaps, rather than poor financial planning. The change promises to bring real financial relief to patients already squeezed by medical costs.
That said, this forgiveness does not extend to credits related to medical expenses. For example, many people choose nursing credit cards to pay for medical expenses. This debt can still affect your credit score (especially if you suddenly stop making payments).
The court’s decision and what it means for you
Unfortunately, the CFPB’s regulations were short-lived. After the rule was adopted in January 2025, it was struck down just a few months later (in July) by the U.S. District Court for the District of Texas. The court concluded that the Fair Credit Reporting Act (FCRA) expressly allows the CRA to include medical debt and therefore the CFPB exceeded its authority.
The decision means unpaid medical bills can continue to appear on credit reports and lenders can use them when evaluating applications. The court also questioned whether, on the same grounds, state laws banning medical debt reporting might be invalid, creating uncertainty about consumer protections at the local level.
There are some nuances to this, though. Starting in spring 2023, medical debt under $500 will not appear on your credit report. Also, it’s important to note that you have time to catch up. You have 12 months before medical debt hits your credit, and most medical practices, hospitals, etc. are happy to work with you on a payment plan if needed.
Putting all that aside, medical debt can and will If left unaddressed, it can harm your credit score.
What is still changing and what is not?
Although the federal rule has been repealed, some changes are still underway:
- As mentioned above, major credit bureaus such as Equifax, Experian, and TransUnion have removed most medical collections under $500 from their 2023 reports.
- More than a dozen states have their own laws limiting the reporting or use of medical debt. (Love Institute)
Without federal rules, however, uniform protection across the country cannot be guaranteed, and new state protection laws may face legal challenges.
Why this matters to you
If you have unpaid medical bills, there are some things you need to know about how this policy may affect you. In a nutshell, here’s what you need to know.
- The debt could still hurt your credit score, affect loan approval, or raise interest rates.
- Mistakes or unexpected balances can persist and intensify unless you take action.
- As federal protections continue to change, it becomes even more important to know your rights and monitor your reports.
- Medical debt is different from general debt; it often arises unexpectedly and poses unique risks to your future financial health.
what can you do now
You are not helpless when it comes to your medical debt. There are steps you can take to protect yourself and your credit. First, request a complete credit report from the three major bureaus and check medical collections. Take the time to verify the accuracy of your medical debt inventory. Is the provider correct? Was insurance denied in error? If you believe the collection is unfair, file a dispute with the bureau and the creditor.
Even if you know your medical bills are completely fair, you are not without options. You can discuss this with your healthcare provider. Many agencies offer hardship programs or write-offs once you request one.
Finally, know your state’s laws regarding medical debt reporting. Things vary from state to state, and you may have some protections based on your state’s policies.
The hope of getting medical debt off your credit file is huge — and if protections return or state laws expand, many people may still benefit. But as federal rules roll back, the results are uncertain and uneven. This makes taking action now even more important. Monitor your credit report, challenge unfair debt listings, and keep your options open. Your health matters, and so does your financial future.
Is there medical debt on your credit report? Do you need help understanding your rights or next steps? Share your experience below!
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Teri Monroe began her career in communications working for local government and non-profit organizations. Today, she is a freelance financial and lifestyle writer and small business owner. In her spare time, she enjoys golfing with her husband, taking long walks with her dog Milo, and playing pickle ball with friends.
