More than one in five Americans has medical debt on their credit reports—and in January 2025, the Consumer Financial Protection Bureau (CFPB) finalized a landmark rule to remove an estimated $49 billion of such debt from the records of 15 million people. The idea was simple: unpaid medical bills often stem from emergencies—not financial behavior—and should not tank your credit score. But by July 2025, a federal court in Texas threw out that rule, saying the agency exceeded its authority. If you’re carrying medical bills, this fight could affect whether—and when—those debts disappear from your report and how lenders treat you next.
What the Rule Promised—and Why It Mattered
The CFPB rule would have prevented consumer credit reporting agencies (CRAs) from including unpaid medical bills on credit reports or allowing lenders to use them in lending decisions. The agency projected that credit scores for those affected could increase on average by 20 points, and about 22,000 extra mortgages might be approved each year. The rule acknowledged that medical debt is often driven by care costs, billing errors, or insurance gaps—not poor financial planning. For patients already squeezed by health costs, the change promised real financial relief.
That said, this forgiveness didn’t extend to lines of credit associated with medical bills. For instance, many people opt for a Care Credit Card to pay for their medical expenses. This debt would still impact your credit score (especially if you suddenly stopped paying on it).
The Court’s Decision and What It Means for You
Unfortunately, the CFPB rule was short-lived. After being passed in January 2025, just a few months later (in July), a U.S. district court in Texas vacated the rule. The court concluded that the Fair Credit Reporting Act (FCRA) explicitly allows CRAs to include medical debt, so the CFPB overstepped its authority.
This decision means that unpaid medical bills can continue to appear on credit reports, and lenders can use them when evaluating applications. The court also questioned whether state laws that ban medical debt reporting might be invalid under the same reasoning, creating uncertainty for consumer protections at the local level.
There are some nuances to this, though. Since the Spring of 2023, medical debt under $500 doesn’t show up on your credit report. Additionally, it’s also important to note that you have time to catch up. You have 12 months before the medical debt even hits your credit, and most medical agencies, hospitals, etc., are happy to work with you on a payment plan, if needed.
All that set aside, medical debt can and will hurt your credit score if it’s not taken care of.
What’s Still Changing—and What’s Not
Even though the federal rule was struck down, some changes remain in motion:
As mentioned above, major credit bureaus like Equifax, Experian, and TransUnion had already removed most medical collections under $500 from reports in 2023.Over a dozen states have their own laws limiting medical debt reporting or use. (Lown Institute)
However, without the federal rule, there’s no guarantee of uniform nationwide protection—and new state protection laws may face legal challenge.
Why This Matters for You
If you have unpaid medical bills, there are some things you need to know about how this policy impacts you. Here’s what you need to know in a nutshell.
That debt may still hurt your credit score, affect loan approval, or increase interest rates.Errors or surprise balances can linger and compound unless you act.Knowing your rights—and monitoring your report—becomes even more important when federal protections are in flux.Medical debt is different from typical debt; it often arises unexpectedly and carries unique risks for your future financial health.
What You Can Do Right Now
You aren’t helpless when it comes to your medical debt. There are steps you can take to protect yourself and your credit. First, request your full credit reports from the three major bureaus and check for medical collections. Take the time to verify the accuracy of medical debt listings. Was the provider correct? Did insurance deny wrongly? If you believe a collection is unfair, dispute it with the bureau and the creditor.
Even if you know the medical bill is completely fair, you’re not out of options. You can negotiate with medical providers. Many offer hardship programs or write-offs once you ask.
Lastly, look into your state’s laws for medical debt reporting. It will vary state by state, and you may be offered some protection under your state’s policies.
The promise of having medical debt vanish from your credit file was huge—and many may still benefit if protections return or state laws expand. But with the federal rule vacated, the outcome is uncertain and uneven. That makes taking action now even more important. Monitor your credit reports, challenge unfair debt listings, and keep your options open. Your health matters—so does your financial future.
Do you have medical debt on your credit report, and would you like help knowing your rights or next steps? Share your experience below!
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Teri Monroe started her career in communications working for local government and nonprofits. Today, she is a freelance finance and lifestyle writer and small business owner. In her spare time, she loves golfing with her husband, taking her dog Milo on long walks, and playing pickleball with friends.
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