WASHINGTON–A Trump administration rule issued late last month would override state laws that prevent consumers’ credit reports from including medical debt, with some arguing the move will weaken financial protections for millions of Americans, according to a new report.
Stateline.com noted that in recent years more than a dozen states have taken steps to keep medical debt from hurting residents’ credit scores, passing laws with bipartisan support.
“But new guidance from the federal Consumer Financial Protection Bureau repeals a Biden-era rule that allowed states to impose their own bans,” Stateline.com reported “The Trump administration has interpreted the 1970 Fair Credit Reporting Act to say that it overrides state laws around reporting debt to credit bureaus.”
More Than $200 Billion in Bills
As Stateline.com noted, American consumers had at least $220 billion in unpaid medical bills in 2024, according to an analysis from research nonprofit KFF. About 6% of American adults, or 14 million people, owe more than $1,000 in medical debt.
In the past two years states that have passed laws forbidding medical debt from appearing on credit reports include California, Colorado, Connecticut, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, North Carolina, Rhode Island, Vermont, Virginia and Washington.
Another five states — Delaware, Florida, Idaho, Nevada and Utah — limit how and when medical debt can appear on credit reports, according to the nonprofit Commonwealth Fund, Stateline.com added.
‘Uncertain Future’
“Now the new state laws face an uncertain future. In January, while Biden was still in office, the Consumer Financial Protection Bureau finalized a rule prohibiting credit reporting agencies from reporting medical debt in certain circumstances,” the report added. “Credit bureaus and credit unions sued to stop the rule. The incoming Trump administration agreed with the plaintiffs and declined to defend the rule in court, so a federal judge blocked it.”
