05.16.2025 By Amy Miller, AFC®

What’s Happening With Medical Debt and Your Credit Report?

In May 2025, the Consumer Financial Protection Bureau (CFPB) announced that it is asking a federal court to vacate a proposed rule that would have barred all medical debt from appearing on credit reports. According to the CFPB, this change of course is due to legal questions around whether the agency had the authority to issue the rule in the first place.

 

UPDATED ARTICLE - UPDATED 5/15/2025

In 2022 and 2023, millions of consumers saw relief when the three major credit bureaus—Equifax, Experian, and TransUnion—removed certain types of paid or low-balance medical debt from credit reports. This was a significant win for consumers and a step toward reducing the long-term financial harm caused by unexpected medical expenses.

But there’s been a new development.

In May 2025, the Consumer Financial Protection Bureau (CFPB) announced that it is asking a federal court to vacate a proposed rule that would have barred all medical debt from appearing on credit reports. According to the CFPB, this change of course is due to legal questions around whether the agency had the authority to issue the rule in the first place.

So what does that mean for you? Let’s break it down.

What’s Changing—and What’s Not

Still in place:

  • As of now, paid medical collections debt and medical collections under $500 are still excluded from your credit reports.
  • Credit bureaus still wait at least one year before reporting new medical debt in collections.

Not moving forward (for now):

  • The CFPB’s plan to ban all medical debt from credit reports—regardless of amount or payment status—is on pause.
  • The legal process may take months (or more) to resolve, so there will be no new protections added at this time.

 

What You Can Do Right Now

Even with this pause, you can take control of your financial future and reduce the impact of medical bills on your credit and savings goals:

  1. Review Your Credit Report:
    You’re entitled to a free credit report every week from each of the three bureaus at AnnualCreditReport.com. Check for errors and ensure no old or paid medical debt has resurfaced.
  2. Negotiate or Set Up a Payment Plan:
    If you’re facing medical bills, don’t ignore them. Talk to your provider’s billing department about financial assistance or a payment plan.
  3. Know Your Rights:
    Under the No Surprises Act, you have protections from unexpected medical bills for emergency services and out-of-network charges at in-network facilities. Learn more at CMS.gov.
  4. Build an Emergency Fund:
    Medical debt often stems from unexpected expenses. Use our 54 Ways To Save to find small, achievable ways to start a health-specific savings fund—even $5 a week adds up.

 

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ORIGINAL ARTICLE - PUBLISHED 1/08/2025

Exciting changes are on the horizon for your credit report! On January 7, The Consumer Financial Protection Bureau (CFPB) finalized a new rule that will remove an estimated $49 million in medical bills from consumer credit reports.

This move is set to alleviate some of the financial stress associated with medical debt and improve the accuracy of credit reporting for around 15 million Americans.

Here’s what you need to know and how this change can benefit you.

What’s Changing?

Starting soon, medical bills will no longer be included on your credit report. Traditionally, unpaid medical debts could negatively impact your credit score, even if you were actively working on paying them down. This rule aims to prevent medical debt from dragging down your credit score, especially when such debts often arise from unexpected and unavoidable health issues.

How This Impacts You

  • Improved Credit Scores:
    With medical debt removed from your credit report, many will see an improvement in their credit scores. This can open doors to better interest rates on loans, mortgages, and credit cards, potentially saving you thousands of dollars over time.
  • Greater Financial Freedom:
    Without medical debt affecting your credit, you’ll have more opportunities to focus on other financial goals, such as saving for an emergency fund, a new home, or retirement. This change can provide a clearer picture of your financial health and help you create a more manageable debt reduction plan.
  • Reduced Stress:
    Medical emergencies are stressful enough without the added worry of how they will affect your credit score. This rule change alleviates some of that burden, allowing you to focus on recovery and financial stability without the looming fear of credit damage.

What Should You Do Next?

  • Review Your Credit Report: Regularly check your credit report to ensure all medical debts have been removed. An exact date hasn’t been set but removal should take place in the next few months. You can access your report for free from the three major credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com. 
  • Build or Rebuild Credit: Use this opportunity to strengthen your credit profile. Make consistent, on-time payments, keep your credit utilization low, and consider using credit-building tools if needed.  (Not sure where to start – check out What you Need to Know About Building Credit)
  • Stay Informed: Stay updated on further developments related to this rule and other financial regulations that may affect your financial health.

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This change is a significant step towards fairer credit reporting and provides a chance for many Americans to improve their financial outlook.

At America Saves, we’re here to help you navigate these changes and make the most of your financial opportunities. Stay informed, keep saving, and remember, every small step you take brings you closer to your financial goals. Start small – think BIG!

For more tips and updates on how to manage your finances effectively, visit AmericaSaves.org and take the pledge today!

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