A sweeping new federal rule was introduced in early 2025 to remove medical debt from credit reports, aiming to boost millions of Americans’ credit scores and reduce the negative influence of medical bills on borrowing. However, in July 2025, a court ruled against this regulation, meaning medical debt can once again be included on credit reports.
What Was the New Rule?
The Consumer Financial Protection Bureau (CFPB) finalized a rule in January 2025 to entirely ban the inclusion of medical debts on credit reports and prohibit lenders from using medical information in credit decisions.
The CFPB found that medical debt is often not a fair indicator of creditworthiness—debts frequently arise from emergencies or billing errors and do not accurately predict whether a person will repay a loan.
Key Features of the Proposed Rule:
Unpaid medical debt (around $49 billion for 15 million Americans) would no longer impact credit scores.
The average person affected would see a credit score increase of about 20 points.
The CFPB expected this change could result in 22,000 more mortgage approvals each year.
Lenders would be barred from considering medical debt or even most forms of medical information, except in very limited and specific circumstances (for example, verifying income paid as Social Security disability or similar).
What Caused the Reversal?
In July 2025, a federal judge vacated (overturned) the CFPB rule, siding with industry groups who challenged the bureau’s authority to make this sweeping change.
As of the ruling, medical debt can remain on credit reports, as long as it is properly coded to conceal sensitive details.
The court decision means the temporary protections the rule would have provided are not currently in effect.
The Current State of Medical Debt on Credit Reports
Credit bureaus (Equifax, Experian, TransUnion) had previously limited the reporting of medical debt by removing:
Paid medical debts
Unpaid medical debts less than a year old
Medical debts under $500
With the court overturning the CFPB’s rule, any other medical debt may be reported and used for credit evaluations.
What Does This Mean for Consumers?
Medical debt can continue to negatively affect credit scores and—by extension—mortgage, auto, and other lending approvals.
Consumers should still dispute any inaccurate medical debts and watch for changes as appeals or new policies may be introduced in the future.
Key Takeaways
There was briefly a historic rule to erase all medical debt from credit reports.
The rule was intended to make lending fairer for those with unavoidable or erroneous medical bills.
A court has now blocked this rule, meaning medical debt can again be reported and considered by lenders as before.
Consumers must remain vigilant, as the legal and regulatory landscape around medical debt and credit reporting remains in flux. Always check for the latest updates and review your credit report for errors or unfair reporting.