Medical Debt on Your Credit Report in 2026: What the Law Actually Says Now

In January 2025, the federal government finalized a rule that would have removed $49 billion in medical debt from the credit reports of 15 million Americans. (Source: Biden White House Fact Sheet)

Six months later, the agency that wrote the rule asked a federal court to kill it.

That's right, the Consumer Financial Protection Bureau---the agency Congress created to protect you from exactly this kind of abuse---switched sides. And then it went further: it issued guidance designed to dismantle state laws that had stepped in to fill the gap.

Here is where things actually stand, what still protects you, and what you can do right now.

The Rule That Almost Saved 15 Million Credit Scores

The CFPB finalized its medical debt rule on January 7, 2025. (Source: CFPB Newsroom) The rule was built on years of the agency's own research showing that medical debt on credit reports is a lousy predictor of whether someone will repay a loan. A 2014 CFPB study found that credit scoring models underestimate the creditworthiness of consumers who owe medical debt in collections---and that consumers carrying medical debt had their creditworthiness underestimated by roughly 10 points. After paying off medical debt, the underestimation widened to 16-22 points. (Source: CFPB Research)

In other words: medical debt doesn't tell lenders much about whether you'll pay your mortgage. It tells them you got sick.

The projected impact was substantial. An average credit score increase of 20 points for affected consumers. Approximately 22,000 additional mortgage approvals per year---people who would have qualified for a home loan if not for an ER visit they didn't choose. (Source: Biden White House Fact Sheet)

The credit reporting and debt collection industries sued immediately.

How the CFPB Killed Its Own Rule

The case was Cornerstone Credit Union League v. CFPB, filed in the Eastern District of Texas before Judge Sean D. Jordan. The credit reporting industry and debt collectors argued the rule exceeded CFPB authority.

What happened next is the part that matters.

Under new leadership, the CFPB didn't defend the rule. It joined the plaintiffs. In April 2025, the agency filed a joint motion with the industry groups asking the court to vacate the rule entirely. The agency charged with protecting consumers from predatory credit reporting asked a federal court to let predatory credit reporting continue. (Source: Consumer Finance Monitor)

The court granted the joint motion on July 11, 2025, vacating the rule entirely. Consumer advocates and patients with medical debt intervened to oppose the motion, but the judge sided with the agency and the industry. The cop asked the judge to dismiss the case against the burglar---and when bystanders objected, the judge sided with the cop.

Fifteen million Americans lost a protection that would have changed their financial lives---not because a court found the rule unlawful, but because the agency responsible for enforcing it decided not to.

The Attack on State Protections

With the federal rule dead, fifteen states had already passed their own laws restricting or banning medical debt from credit reports. These state laws became the last line of defense for millions of patients.

So the CFPB went after those too.

On October 20, 2025, the agency issued an interpretive rule arguing that the Fair Credit Reporting Act (FCRA) preempts state medical debt credit reporting protections. (Source: National Law Review) This reversed a 2022 interpretive rule from the Biden-era CFPB that had concluded FCRA preemption was "narrow and targeted"---meaning states were free to go further than federal law in protecting consumers. (Source: Consumer Finance Insights)

The sequence is worth sitting with. The federal government promised to remove medical debt from credit reports. Then it killed its own rule. Then it told states they couldn't do what the federal government had just refused to do.

There is good news buried in the wreckage: the interpretive rule is non-binding. It's the CFPB's opinion, not law. Three federal circuit courts have supported the opposite conclusion---that FCRA preemption is narrow and does not automatically override state consumer protections. (Source: NCLC Legal Analysis)

But non-binding guidance still provides cover for industry lawsuits. And the industry is using it.

The Colorado Lawsuit

On November 25, 2025, ACA International---a trade group representing debt collectors---sued the state of Colorado to block its medical debt credit reporting law (HB 23-1126). (Source: Consumer Finance Monitor)

The lawsuit makes a novel argument: restricting medical debt credit reporting is a content-based restriction on commercial speech that violates the First Amendment. By this logic, a state law saying "you can't put medical debt on someone's credit report" is no different from the government censoring a newspaper.

This is the debt collection industry arguing that reporting your unpaid medical bills is a form of protected free expression.

If that argument succeeds, it could invalidate medical debt credit protections nationwide---not just Colorado's.

The Coming Wave

All of this is happening against a backdrop that will generate more medical debt, not less.

The One Big Beautiful Bill Act, signed July 4, 2025, includes $911 billion in Medicaid cuts. (Source: KFF Medicaid Analysis) The Congressional Budget Office estimated, based on the House version with $625 billion in cuts, that at least 10.5 million people would lose Medicaid coverage by 2034. The enacted law cuts deeper---actual losses will likely be higher, but CBO has not yet scored the final version.

People who lose Medicaid don't stop getting sick. They stop being able to pay for it.

Third Way projects $44 billion in new medical debt---a 13% increase over the current $340 billion base---driven by coverage losses from the law. (Source: Third Way)

More medical debt. Fewer protections from that debt appearing on your credit report. The timing is not a coincidence.

Which States Still Protect You

Fifteen states have enacted laws restricting medical debt on credit reports. New York and Colorado led the way in 2023; most others enacted protections in 2024-2025. These laws remain in effect, though the CFPB's preemption guidance and the ACA International lawsuit threaten all of them. (Source: NCLC State Law Tracker)

*New Jersey's law only covers medical debts under $500---significantly narrower than other states.

If you live in one of these states, your protections are real but not guaranteed. The Colorado lawsuit could set a precedent affecting all fifteen. Watch for updates from your state attorney general's office.

What Still Protects You (For Now)

Even without the federal rule, credit bureau voluntary policies provide some protection. Since April 11, 2023, all three major bureaus---Equifax, Experian, and TransUnion---have excluded medical collections under $500 from credit reports, removing roughly 70% of all medical collection tradelines. (Source: TransUnion Newsroom)

Additional voluntary protections:

• One-year reporting delay: Medical collections don't appear on your credit report until 12 months after being sent to collections (up from 6 months, effective July 1, 2022)
• Paid collections removed: Medical debt that has been paid is permanently excluded from credit reports

The critical word is voluntary. These are business decisions by three private companies, not legal requirements. If the math changes, these protections disappear with a press release.

Your Action Plan Right Now

You don't have to wait for Washington or the courts. Here's what you can do today.

1. Check your credit reports. Go to AnnualCreditReport.com---the only federally authorized source---and pull reports from all three bureaus. Look for any medical collections. Under current voluntary policies, debts under $500 and those less than a year old should not appear.

2. Know your state. If you live in one of the 15 states with protections, medical debt on your credit report may violate state law. Contact your state attorney general's consumer protection division if you find medical collections that shouldn't be there.

3. Dispute what's already on your report. If you find medical debt that shouldn't be there---wrong amount, wrong person, paid debt, or debt under $500---dispute it directly with each bureau online or by mail. The bureau has 30 days to investigate. For more on your dispute rights, see our guide to patient rights.

4. Negotiate before collections. Medical debt is most damaging once it reaches a collection agency. If you have an outstanding bill, contact the provider's billing department and negotiate a payment plan or reduced amount before they send it to collections. Many hospitals are required to offer financial assistance programs to qualifying patients.

5. Validate what collectors claim you owe. If a debt collector contacts you, you have 30 days to request written verification under the Fair Debt Collection Practices Act. The collector must prove the amount, the original creditor, and that the debt is yours. Don't pay anything until you've confirmed it's accurate.

6. Get help. If you're facing legal action over medical debt, free and low-cost legal aid is available. See our guide to medical debt legal help for resources in your state.

Medical debt credit reporting law is changing fast. We update this article as new developments occur. Last reviewed April 2026.

If you're dealing with medical debt, you don't have to figure it out alone. Start with our guides to understanding medical debt and what to do when you can't afford a medical bill.

This article is for educational purposes only and does not constitute legal advice. Laws vary by state and individual circumstances differ. If you need help with medical debt on your credit report, consult a qualified attorney or contact your state attorney general's consumer protection division.