Medical Debt Removal From Credit Reports After the 2023 CFPB Rule

Medical debt removal from credit reports in 2026 depends on where you live, what debt you carry, and which scoring model a lender uses. The CFPB’s federal ban was finalized in January 2025, later than 2023, and was later struck down. Some protections remain, but none replaces the nationwide rule consumers lost.

Why the CFPB's medical debt rule matters even though it no longer exists

Consumers now face bureau policies, scoring practices, and state laws that overlap and protect different people in different ways. Millions of Americans have reason to be unsure whether a medical bill can still affect their access to credit.

That uncertainty comes as more people are expected to face medical bills without health coverage. Congress passed a law that cuts Medicaid by nearly a trillion dollars and limits who can enroll in the ACA marketplace. Estimates project that 10–17 million people will lose coverage. More people are therefore likely to carry medical debt into a system with no coherent federal rule.

What the CFPB rule actually did before it was struck down

The CFPB finalized the rule in January 2025, published it as 90 FR 3276, and set an effective date of March 17, 2025. It addressed two separate parts of the credit system, namely what bureaus could report and what lenders could use. But Regulation V had an exception that let creditors get and use medical debt information. The rule removed that exception.

The reporting restriction supported the lending restriction. Consumer reporting agencies generally could not give a creditor a report containing medical debt information that the creditor was barred from using. The rule also barred lenders from using medical devices, including wheelchairs and prosthetic limbs, as loan collateral and repossessing them for nonpayment.

The CFPB projected that the rule would erase tens of billions of dollars in medical bills from credit reports for millions of Americans. It also projected a meaningful average credit score increase for those affected. The intended benefit extended beyond the bill itself to the price and availability of future borrowing. Removing a medical collection was meant to keep a health expense from raising the cost of other credit.

Why the rule was struck down and what the court's reasoning means going forward

The U.S. District Court for the Eastern District of Texas vacated the rule on July 11, 2025, making it unenforceable immediately. Under the new administration, the CFPB had reversed its position and agreed that the rule exceeded its authority. The court’s reasoning concerned the statute. It found that the FCRA expressly permits furnishing “coded” medical debt information, which the rule had sought to block.

That distinction limits the route back to a federal ban. An executive-branch agency cannot override permission Congress wrote into the law by issuing another rule. A federal fix therefore needs Congress to change the FCRA. The Medical Debt Relief Act of 2025, S.2519/H.R.4827, would prohibit bureaus from including medical debt and lenders from using it in loan evaluations. Introduced in July 2025, it remains in committee in both chambers and has not been voted on.

What the three major credit bureaus still do voluntarily, and why that floor is shakier than it looks

Equifax, Experian, and TransUnion adopted voluntary protections during 2022–2023 that remain separate from the vacated rule. They stopped reporting paid medical collections and medical debt that was less than one year delinquent. They also removed unpaid medical collections under $500, with the smaller-debt change taking effect in the Spring of 2023. Unpaid medical collections over $500 that are more than one year old may still appear on all three bureaus’ reports.

These policies provide a nationwide floor, but they are not statutory obligations. The bureaus’ joint removal of smaller medical collection debts faces an antitrust concerted-action lawsuit. That challenge puts the policies’ legal footing in dispute. The bureaus also retain the option to reverse course because no regulation or court order requires them to maintain this voluntary approach. Beyond that floor, scoring models and state laws determine much of the meaningful variation.

How different credit scoring models treat medical debt, and why the model used determines the real impact

A medical collection appearing on a report and lowering a score are different things. VantageScore 4.0 excludes all medical collection data from its calculations, regardless of the collection’s amount or age. A debt can therefore remain visible on a report without affecting that particular score. The lender chooses the scoring model. That choice matters more than a general assurance that medical debt is now treated differently.

The Federal Housing Finance Agency announced approval of FICO 10T and VantageScore 4.0 for Fannie Mae and Freddie Mac in 2022. The transition toward those models is underway, but its completion is not established for every transaction. The separate plan to move from tri-merge to bi-merge credit reporting was later dropped. The scoring change and the number of bureau reports used are therefore not the same development. For a mortgage applicant, the practical question remains which model will actually assess the application.

Which states have enacted their own medical debt credit reporting bans and what each one actually prohibits

State protections differ in whom they bind. A law restricting a credit bureau is not identical to one barring providers or debt collectors from supplying information. California SB 1061 (Limón), enacted September 24, 2024, reaches furnishing, reporting, and use in credit evaluations. It also requires contracts with healthcare providers to bar debt collectors from furnishing medical debt. It took effect January 1, 2025, with some provisions effective July 1, 2025.

Colorado HB 23-1126 limits credit bureaus from reporting medical debt. Enacted June 5, 2023, it took effect August 7, 2023, and sunsets July 1, 2028. Connecticut Public Act 24-6 instead prohibits furnishers from reporting medical debt and requires provider contracts to extend that restriction to debt collectors. It was enacted May 9, 2024, and took effect July 1, 2024. Illinois Public Act 103-0648 limits bureau reporting, was enacted July 2, 2024, and took effect January 1, 2025.

Delaware Senate Substitute 1 for SB 156 prohibits both furnishing medical debt and bureau reporting. It was enacted July 29, 2025, and took effect October 27, 2025. Maine Me. Rev. Stat. tit. 10, §§ 1308, 1310-H also limits both activities, following enactment June 9, 2025, and an effective date of September 24, 2025. District of Columbia B26-0438 prohibits furnishing medical debt information to bureaus. It was enacted and became effective August 20, 2026.

Maryland enacted HB 1020, although the available details do not establish its specific effective date. Vermont SB 27 (Lyons), passed in 2025, eliminated up to $100 million in medical debt for low- and moderate-income residents and removes medical debt from credit scores. Nevada and Texas allow hospitals to report only after certain conditions are met. These examples provide a partial reference to state protections. NCLC maintains a full list, and state law details can change.

Whether the FCRA preempts state medical debt laws — the legal fight that determines if state protections survive

Whether federal law overrides these state protections remains unresolved. That is what “preemption” means here. The CFPB’s October 2025 interpretive rule takes the position that the FCRA preempts state medical debt protections. But the interpretive rule acknowledges that it is not legally binding. An agency’s reading of the law is not itself a nationwide court judgment.

Two federal district courts in Texas have expressed the view that the FCRA preempts state reporting restrictions. In CDIA v. Paxton, decided August 10, 2026, the court held that federal law preempted a Texas prohibition on reporting debts from surprise medical bills. State laws in other circuits remain in place following those district-level opinions. Most consumer law experts treat state protections as valid unless a court with jurisdiction rules otherwise, though they see the Texas decisions as a sign that future lawsuits could put those protections at risk.

Who bears the cost of the current patchwork — and why the burden is not distributed evenly

A 2026 study led by UC Berkeley researchers found that Black Americans are nearly twice as likely as white borrowers to carry medical debt. The CFPB found in 2024 that people still carrying significant medical debt on their reports were more likely to live in the South and in predominantly Black and Latino/Hispanic neighborhoods. State bans concentrated in the Northeast and West Coast do not fully cover those populations. People with older unpaid collections over $500 can still have those debts reported. That exposure can mean higher interest rates, more expensive loans, and reduced credit access.

The American Hospital Association argued in public CFPB comments that removal could weaken patients’ financial accountability and motivation to maintain health insurance. A 2025 NBER working paper by faculty at University of Illinois Urbana-Champaign found no evidence in either model it tested that erasing medical debt changed credit scores or how people borrowed. It also found no evidence that lenders had been using the information in credit decisions.

If medical debt has no demonstrated value in predicting repayment, keeping it on reports may serve as punishment. But that argument leaves the NBER findings in place and does not prove that removing medical debt alone helps people get credit. The unequal burden and the disputed value of the tool both matter.

What consumers can actually do today, depending on where they live and what debt they carry

Start with the debt that actually appears on each report. Obtain free weekly reports from all three bureaus through annualcreditreport.com. NCLC recommends that central source rather than individual bureau accounts that may require mandatory arbitration agreements. Look for paid medical collections, collections under $500, and debt that is less than one year delinquent. Those entries should not appear under the bureaus’ voluntary policies.

Next, identify whether your state restricts the party reporting the debt. A law covering furnishers may support a dispute with a provider or collector, while a reporting ban also concerns the bureau. Debt appearing in violation of an applicable state law can be disputed directly with the bureau and the furnisher. However, the unresolved preemption fight means state protections cannot be treated as immune from legal challenge.

The FCRA lets consumers dispute information that is wrong or incomplete. An incorrect amount or a debt covered by insurance can be challenged on accuracy grounds without relying on a medical debt ban. This distinction matters because the interactions among providers, insurers, and collectors can produce billing errors. The right to dispute information does not guarantee removal of an accurate debt that remains reportable.

For a mortgage application, ask the lender which scoring model it uses, including whether it uses FICO 8 or a newer model. Do not assume that an announced transition applies to your transaction. Consumers can also monitor the Medical Debt Relief Act of 2025 and contact their representatives.

Where the medical debt credit reporting landscape is headed and what would have to change for it to stabilize

Three forces will shape what happens next, namely Congress, federal courts deciding preemption, and the mortgage industry’s scoring transition. Congress could establish a nationwide prohibition by amending the FCRA. Courts could preserve state protections or narrow them by adopting the reasoning of the Texas district courts. Scoring changes could reduce medical collections’ effect on mortgage scores without removing the underlying information from every report.

The distinction between settled and contested protections is the clearest way to follow this landscape. The CFPB rule is gone, while accuracy dispute rights remain. Bureau policies still remove some debt, but they are voluntary and legally contested. State laws offer additional protection where they hold, and scoring models can limit a collection’s effect.