Medical Debt Returns to Credit Reports: How It Affects Everyday Americans

Imagine this: you've just recovered from a serious illness, but now you're facing another challenge—your credit score has taken a hit due to medical bills. This scenario is becoming a reality for many Americans as medical debt is once again being factored into credit reports.

In early 2025, the Consumer Financial Protection Bureau (CFPB) finalized a rule to remove medical bills from credit reports, aiming to alleviate financial burdens for millions. The rule was set to eliminate an estimated $49 billion in medical debt from the records of about 15 million Americans. The CFPB argued that medical debt is often involuntary and doesn't accurately predict a person's ability to repay loans. They also highlighted that medical bills frequently contain errors or are subject to insurance disputes, making them unreliable indicators of creditworthiness.

However, this policy faced immediate legal challenges. Industry groups, including the Consumer Data Industry Association, filed lawsuits claiming that the CFPB overstepped its authority. They argued that excluding medical debt could compromise the accuracy of credit reports and hinder lenders' ability to assess risk effectively. In May 2025, under new leadership appointed by President Trump, the CFPB reversed its stance and joined the plaintiffs in seeking to vacate the rule. This move signaled a significant shift in the agency's approach to consumer protection and credit reporting.

The reinstatement of medical debt on credit reports has profound implications for consumers. For individuals like David Deeds, a 62-year-old cancer survivor with substantial medical debt, this change could mean the difference between securing housing or facing homelessness. Deeds emphasized the importance of his credit score in accessing essential services and opportunities.

Critics of the reinstatement argue that it disproportionately affects vulnerable populations, including those with chronic illnesses or unexpected medical emergencies. They contend that medical debt is often incurred under duress and should not penalize individuals seeking financial stability. Supporters, on the other hand, believe that all debts should be reported to provide a complete picture of an individual's financial obligations, enabling lenders to make informed decisions.

As this policy shift unfolds, it's crucial for consumers to stay informed about their rights and the resources available to manage medical debt. Advocacy groups continue to push for reforms that balance the need for accurate credit reporting with compassion for those burdened by medical expenses. The debate underscores the ongoing tension between financial institutions' interests and consumer protection, highlighting the need for policies that consider the complexities of medical debt and its impact on individuals' lives.