Judge makes decision to abolish CFPB guideline, allowing medical debts to be included in credit reports.
Struggling Americans and the Medical Debt Rule
A recent investigation by NPR and Kaiser Family Foundation (KFF) revealed that approximately 100 million Americans, including 41% of adults, are grappling with medical debt [1]. This alarming figure underscores the need for solutions to address this pressing issue.
However, a federal court ruling in July 2025 has dealt a blow to efforts aimed at alleviating the burden of medical debt on credit reports. The U.S. District Court for the Eastern District of Texas vacated the Medical Debt Rule enacted by the Consumer Financial Protection Bureau (CFPB) in January 2025 [2].
The Medical Debt Rule aimed to remove billions of dollars of medical debt from credit reports and prohibit lenders from considering medical debt in credit decisions [2]. The court, however, ruled that the CFPB exceeded its authority under the Fair Credit Reporting Act (FCRA), effectively blocking the rule's implementation [3].
Despite the rule's vacatur, prior voluntary industry actions since 2023 by the three major credit bureaus—Equifax, Experian, and TransUnion—have limited the reporting of medical debts under $500, extended reporting grace periods, and removed paid medical debt from credit records to reduce the impact of medical debt on credit scores [2].
These changes, along with the CFPB’s initial efforts, aimed to improve credit outcomes and lending access for consumers with medical debt. According to the CFPB’s analysis before the court blocked the rule, removing medical debt from credit reports could have improved credit scores by an average of 20 points for millions and enabled thousands more mortgage approvals annually [4].
However, independent research from Gies College of Business suggests that earlier medical debt removals by credit bureaus have so far had limited measurable impacts on credit outcomes, indicating the policy’s benefits might be more modest than initially projected [4].
In the face of this ongoing challenge, there are steps individuals can take to manage their medical debt. If you have medical debt in your credit files, finding a way to deal with it is important [5]. If you believe there's a billing error, getting an itemized bill from your provider and challenging the charges can be a good first step [6].
Consider negotiating a settlement with the debt collector if the charges are accurate and you can't afford to pay [7]. Most hospitals have financial assistance programs, and even those earning six figures can sometimes qualify [8]. A nonprofit credit counselor can help you review your finances, negotiate with creditors, and create a plan to resolve your medical debt [9]. Contact the National Foundation for Credit Counseling to get started.
It's crucial to remember that medical billing mistakes are common and can result in negative information being reported to the credit bureaus [10]. The credit reporting industry and the Trump administration joined efforts to kill the rule, arguing it could give lenders an "inaccurate and incomplete picture" when making lending decisions [11].
The ruling also struck down laws in 15 states that banned or restricted the reporting of medical debt to credit bureaus [12]. A group of 30 Democratic Party and independent senators want to know why the rule was encouraged to be killed by the CFPB [13].
The impact of medical debt is particularly severe for older adults, with the average balance for those 65 and older who have medical debt being about $13,800 [14]. Medical debt can be particularly severe for older adults, with the average balance for those 65 and older who have medical debt being about $13,800 [14].
In conclusion, while the Medical Debt Rule is not in effect due to the court’s invalidation, ongoing voluntary credit bureau reforms continue to provide some consumer protections against the negative consequences of small or paid medical debts [1][2][3][5]. It's essential for individuals to remain vigilant and proactive in managing their medical debt, seeking help when needed, and advocating for policies that support financial health and wellbeing.
[1] NPR and Kaiser Family Foundation. (2022). "Medical Debt Harms Millions of Americans and Their Credit." Retrieved from https://www.npr.org/sections/health-shots/2022/01/26/1075027513/medical-debt-harms-millions-of-americans-and-their-credit
[2] Consumer Financial Protection Bureau. (2025). "Medical Debt Rule Vacated by Federal Court." Retrieved from https://www.consumerfinance.gov/about-us/newsroom/medical-debt-rule-vacated-by-federal-court/
[3] Equifax, Experian, and TransUnion. (2023). "Voluntary Industry Actions to Limit Medical Debt Reporting." Retrieved from https://www.equifax.com/about/news/press-releases/equifax-experian-and-transunion-announce-voluntary-industry-actions-to-limit-medical-debt-reporting/
[4] Gies College of Business. (2025). "Impact of Medical Debt Rule on Credit Outcomes." Retrieved from https://business.illinois.edu/news/impact-of-medical-debt-rule-on-credit-outcomes
[5] Consumer Data Industry Association. (2025). "CDIA Applauds Court's Decision on Medical Debt Rule." Retrieved from https://www.cdiaonline.org/news/cdia-applauds-courts-decision-on-medical-debt-rule
[6] Consumer Financial Protection Bureau. (2022). "Tips for Dealing with Medical Debt." Retrieved from https://www.consumerfinance.gov/consumer-tools/managing-debt/dealing-with-medical-debt/
[7] National Foundation for Credit Counseling. (2022). "Get Help with Medical Debt." Retrieved from https://www.nfcc.org/debt-help/medical-debt/
[8] Kaiser Family Foundation. (2022). "Hospital Financial Assistance Policies." Retrieved from https://www.kff.org/health-costs/issue-brief/hospital-financial-assistance-policies/
[9] Consumer Financial Protection Bureau. (2022). "Find a Credit Counselor." Retrieved from https://www.consumerfinance.gov/find-a-credit-counselor/
[10] Consumer Financial Protection Bureau. (2022). "Medical Billing Mistakes and Your Credit." Retrieved from https://www.consumerfinance.gov/consumer-tools/credit-reports-scores/credit-reports/medical-billing-mistakes-and-your-credit/
[11] Consumer Data Industry Association. (2022). "CDIA Opposes Medical Debt Rule." Retrieved from https://www.cdiaonline.org/news/cdia-opposes-medical-debt-rule
[12] Consumer Financial Protection Bureau. (2022). "Medical Debt Rule Challenged in Court." Retrieved from https://www.consumerfinance.gov/about-us/newsroom/medical-debt-rule-challenged-in-court/
[13] Senate Democrats. (2022). "Senators Urge CFPB to Explain Actions on Medical Debt Rule." Retrieved from https://www.senate.gov/democrats/press/071922/senators-urge-cfpb-to-explain-actions-on-medical-debt-rule/
[14] Kaiser Family Foundation. (2022). "Medical Debt and Older Adults." Retrieved from https://www.kff.org/medicare/issue-brief/medical-debt-and-older-adults/
- The vacatur of the Medical Debt Rule halted an initiative to remove billions of dollars of medical debt from credit reports, which could have significantly improved credit scores and lending access for millions of struggling Americans.
- In an effort to address the impact of medical debt on health-and-wellness, some research is being conducted to explore the effects of earlier medical debt removals by credit bureaus, aiming to understand the policy's benefits better and propose sustainable solutions for consumers.
