Money Research Collective’s editorial team solely created this content. Opinions are their own, but compensation and in-depth research determine where and how companies may appear. Many featured companies advertise with us. How we make money.
Have Medical Debt? Your Credit Score Could Increase Under New Policy
By Adam Hardy MONEY RESEARCH COLLECTIVE
The CFPB estimates that 15 million Americans could see their credit scores rise by an average of 20 points as a result.
Millions of Americans may soon see their credit scores increase as new federal policies bar lenders and credit reporting companies from holding one’s unpaid medical bills against them.
The Consumer Financial Protection Bureau (CFPB) finalized a rule on Tuesday that bans medical information from being used in lending and credit reporting decisions. The CFPB estimates that 15 million Americans could see their credit scores rise by an average of 20 points once the policy takes effect, which is expected to be in mid-March.
“People who get sick shouldn’t have their financial future upended,” said CFPB Director Rohit Chopra in a news release about the new rule.
In April 2023, the big three credit bureaus — Equifax, Experian and TransUnion — already removed medical debts under $500 from credit reports, in a self-regulatory move that they say wiped out 70% of the medical bills that were plaguing people’s credit.
Still, the CFPB found that about $50 billion of medical debt remained on the credit reports of millions of Americans afterward.
Credit scores and the reports they’re based on are commonly used as a way for lenders, landlords and employers to quickly check whether a person is likely to repay their debts. The watchdog agency says that medical debt is a particularly bad predictor of people’s ability to repay a loan because the debt is rarely taken on voluntarily. Medical debt, the agency says, can have lingering and debilitating effects that keep Americans from the loans, housing and even jobs they need to survive.
A 2023 report from the health policy nonprofit Kaiser Family Foundation found that medical debt was a major contributing factor for thousands of Denver residents facing homelessness or housing instability. Later that year, Colorado became the first state to bar medical debt from blemishing residents’ credit reports. California and New York quickly followed suit.
Now, the entire U.S. appears to be following in those states’ footsteps — but the policy may be in jeopardy given that the CFPB announced the new federal rule just weeks before President Joe Biden is set to leave office.
Will Trump keep the medical debt rule in place?
Though the CFPB finalized the rule on Tuesday, it isn’t expected to take effect until 60 days after it is published in the Federal Register — meaning some time in March.
At that point, Biden will be out of office, and President-elect Donald Trump will be in power. This gives Republicans and the Trump administration the ability to reverse the CFPB’s rule before it’s enacted.
The crippling consequences of medical debt are widely felt, however, and medical debt is looked upon unfavorably across the political spectrum. According to a 2023 survey from the Pew Research Center, 64% of Americans said the affordability of health care was a “very big problem” in the country today, including 54% of Republican-leaning respondents and 73% of Democrat-leaning respondents.
That said, the rule has already sparked some backlash. While the policies were undergoing the official rulemaking process last year, a group of Republican lawmakers wrote to the CFPB to express “serious concerns” about omitting medical debt from credit reports. They said doing so would provide an incomplete picture of someone’s financial situation, harming financial institutions and ultimately consumers.
Banking trade groups similarly wrote to Chopra and the CFPB voicing their disapproval of the rule.
Even though the three big credit bureaus voluntarily removed medical debt under $500 from credit reports, a handful of industry leaders came out Tuesday against the CFPB’s new rule to remove all such debts from credit reports.
The CFPB “lacks the authority to dictate what can and cannot be included on credit reports,” Dan Smith, CEO of the Consumer Data Industry Association, said in a statement shared with Money. (The CDIA is an industry trade group that represents the big three credit bureaus as well as many other niche credit reporting agencies.)
Some advisors in Trump’s orbit are not fans of the CFPB. Multibillionaire Elon Musk is chief among them. Tasked with overseeing the Department of Government Efficiency, or DOGE, Musk recently said he wants to “delete [the] CFPB.”
DOGE is not an official government agency, and its recommendations to Trump aren’t binding. Also, any creation (or deletion) of government agencies or departments require Congressional approval. Even so, Musk’s sentiment could provide a clue as to how Trump will view the CFPB in his second term.
Ultimately, it’s not clear how Trump will handle the new medical debt rule, and his transition team did not respond to Money’s request for comment.
Find a Credit Repair company that works for you
🥇 Most Affordable Credit Help Company!
- The advisory team helps you take the necessary steps to improve your credit health overall
- Setup or First Work Fee: $99 - $195
- Monthly Fees: $79.99 - $129.99
- Over 10,000 Google Reviews at 4.8 Stars
- 90-day Money-Back Guarantee
Get your free credit assessment today!
- Licensed attorneys, paralegals, and personalized score improvement strategies
- $139.95 per Month
- $1M coverage in identity theft
- Mobile app allows you to monitor the development of your case
- Free credit assessment - Cancel Anytime
All plans include unlimited disputes to all three credit bureaus
- Monthly fees: $79 or $119
- Flat-rate six month fee for $599 also available
- First work fee: $19
- No available discounts
- Money-back satisfaction guarantee refunds the month you cancel the service and previous month
Even the most basic packages include financial management tools
- Credit monitoring is included with every plan, regardless of the price
- Setup or First Work Fee: $29 - $49**
- Monthly Fees: $69 - $149
- 60-day Money-Back Guarantee
**(With $100 back coupon orig. price of $129 - $149)
Over 15 years of experience in the industry
- First work fee: $129
- Monthly fees: $129.99
- Includes free consultation, credit score analysis and more
- No available discounts
- 90-day money-back guarantee
More from Money:
A Secret Web of Credit Reports Is Tracking Everything You Do
Is It Even Worth Paying Medical Debt Under $500 if It Doesn’t Hurt Your Credit Anymore?
New Medicare Rules Will Make Prescription Drugs a Lot Cheaper in 2025
Adam Hardy is Money's lead data journalist. He writes news and feature stories aimed at helping everyday people manage their finances. He joined Money full-time in 2021 but has covered personal finance and economic topics since 2018. Previously, he worked for Forbes Advisor, The Penny Hoarder and Creative Loafing. In addition to those outlets, Adam’s work has been featured in a variety of local, national and international publications, including the Asia Times, Business Insider, Las Vegas Review-Journal, Yahoo! Finance, Nasdaq and several others. Adam graduated with a bachelor’s degree from the University of South Florida, where he studied magazine journalism and sociology. As a first-generation college graduate from a low-income, single-parent household, Adam understands firsthand the financial barriers that plague low-income Americans. His reporting aims to illuminate these issues. Since joining Money, Adam has already written over 300 articles, including a cover story on financial surveillance, a profile of Director Rohit Chopra of the Consumer Financial Protection Bureau and an investigation into flexible spending accounts, which found that workers forfeit billions of dollars annually through the workplace plans. He has also led data analysis on some of Money’s marquee rankings, including Best Places to Live, Best Places to Travel and Best Hospitals. He regularly contributes data reporting for Best Colleges, Best Banks and other lists as well. Adam also holds a multimedia storytelling certificate from Poynter’s News University and a data journalism certificate from the Investigative Reporters and Editors (IRE) at the University of Missouri. In 2017, he received an English teaching certification from the University of Cambridge, which he utilized during his time in Seoul, South Korea. There, he taught students of all ages, from 5 to 65, and worked with North Korean refugees who were resettling in the area. Now, Adam lives in Saint Petersburg, Florida, with his pup Bambi. He is a card-carrying shuffleboard club member.