Millions of Americans grappling with mounting medical bills are now facing another financial setback: the continued impact of medical debt on their credit scores. A federal judge on Friday vacated a key Biden-era rule that aimed to eliminate medical debt from credit reports—a move intended to make it easier for individuals to access loans for homes, cars, or businesses.
The rule, introduced by the Consumer Financial Protection Bureau (CFPB) in the final days of President Joe Biden’s term, sought to address what the administration described as a “burden” that unfairly penalized people for unexpected healthcare expenses. A White House press release at the time stated the goal was to ensure patients were “not denied access to credit” due to unpaid medical bills.
However, the rule never went into effect. Under the Trump administration, the CFPB reversed its stance. The rule was ultimately struck down by a federal judge—appointed by President Donald Trump—who ruled it exceeded the agency’s authority under the Fair Credit Reporting Act.
According to CFPB data, around $88 billion in unpaid medical bills are currently in collections, affecting roughly one in five Americans. The agency has also noted that medical debt is a “poor predictor” of a consumer’s ability to repay loans, but still contributes to thousands of mortgage and loan application rejections each year.
JoAnn Volk, co-director of the Center on Health Insurance Reforms at Georgetown University, criticized the ruling, saying it removes “an important protection for families who are going to be shut out of credit because of this medical debt that they could not avoid.”
Experts argue that medical debt differs fundamentally from other types of debt. “Nobody plans to go to the hospital or have a kid slip and fall and need to be rushed to the ER,” said Neale Mahoney, a Stanford University economics professor. “Medical debt is more often the result of bad luck than bad financial behavior.”
With the rule now invalidated, individuals struggling with medical debt are advised to take proactive steps. The CFPB recommends confirming the accuracy of bills, contacting insurance providers for potential coverage errors, and disputing any inaccuracies on credit reports. If a debt has been sent to collections, Mahoney suggests negotiating a manageable payment plan, which in some cases may lead to the debt being removed from the credit report.
As legal and political battles over medical debt protections continue, advocates warn that the financial fallout from unexpected medical costs will remain a heavy burden for millions of Americans.
