How Medical Debt Affects Your Credit Report

9/1/2025

Medical debt has long been a significant concern for many Americans, often impacting credit scores and, consequently, access to loans, housing, and even employment opportunities. Recent federal and state policy changes have aimed to address this issue, although some have faced legal challenges.

Medical debt can still affect a consumer's credit, but changes made by the three nationwide credit bureaus have substantially reduced its impact. Paid medical collections are no longer included on credit reports, and medical collection accounts with an initial reported balance below $500 are also excluded. Unpaid medical collections generally do not appear until at least one year after the original delinquency. Medical collections of $500 or more that remain unpaid may still appear on a credit report, depending in part on applicable state law.

Reporting of Medical Debt on Credit Reports

Traditionally, medical debt is reported on credit reports when it goes unpaid and is sent to collections. This information is then used by lenders to assess creditworthiness. However, medical debt differs from other types of debt in several ways:

Unpredictability: Medical emergencies are often unexpected, leading to unforeseen expenses.

Insurance Complications: Billing errors or disputes with insurance providers can result in unpaid bills that are not the fault of the patient.

Financial Hardship: Even insured individuals may struggle with high deductibles or out-of-network charges.

In June 2024, the Consumer Financial Protection Bureau proposed a rule intended to significantly restrict the use of medical debt in credit decisions. The agency finalized the rule in January 2025. It would generally have prevented credit reporting companies from providing medical debt information to lenders and prohibited lenders from considering that information when determining eligibility for credit.

At the time the CFPB developed the rule, the agency estimated that about 15 million Americans had approximately $49 billion in medical collections appearing on their credit reports. The CFPB estimated that removing those debts could increase affected consumers' credit scores by an average of about 20 points and result in approximately 22,000 additional mortgage approvals each year. Those projections did not ultimately become nationwide outcomes because the rule was later vacated.

In July, 2025, a federal court in Texas vacated the rule, concluding that the CFPB had exceeded its authority under the Fair Credit Reporting Act. As a result, there is currently no federal rule that categorically removes all medical debt from consumer credit reports.

State-Level Action

Despite the federal setback, several states have enacted their own laws to protect consumers from the negative impacts of medical debt on credit reports. As of 2026, 14 states have enacted laws that prohibit medical debt from appearing on consumer credit reports, while other states impose additional restrictions on when or how medical debt can be reported.

What This Means for You

If you have medical debt on your credit report, it's essential to:

Check Your Credit Report: Regularly review your credit reports for accuracy.

Dispute Inaccuracies: If you find errors, dispute them with the credit bureaus.

Seek Professional Advice: Consider consulting with a credit counselor or financial advisor if your debt is becoming overwhelming.

While the CFPB's nationwide medical debt rule was vacated, state laws may provide additional protections.

 

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