Do Medical Bills Affect Your Credit? Rules Change Again

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In January 2025, the Consumer Financial Protection Bureau (CFPB) announced a new rule aimed at removing all medical debt from credit reports. Six months later, a federal judge abolished the rule altogether.

Set to take effect in March 2025 — before it was stalled in court — this rule was expected to erase an estimated $49 billion in unpaid medical bills from credit reports. This could have potentially boosted credit scores by an average of 20 points for approximately 15 million Americans, according to the CFPB.

This latest update marks a significant defeat for consumers, especially those recovering from unexpected medical expenses. The remaining credit damage could make it harder for borrowers to get approved for mortgages, loans and credit cards.

What happened to the would-be landmark rules?

The summertime decision by U.S. District Court of Texas’ Eastern District Judge Sean Jordan concluded a 13-month-long battle over the Biden Administration-proposed rules. The timeline began in June 2024 when then-President Biden first proposed the rules. Let’s pick it up in early 2025.

Fifteen states across the country prohibit medical debt from affecting credit in some form. But Judge Jordan’s decision struck a nationalistic chord, noting that any state rules “would be inconsistent with FCRA and therefore preempted,” the FCRA being the Fair Credit Reporting Act.

The Consumer Data Industry Association, another plaintiff in the drawn-out case, confirmed to the New York Times that other recent changes to the reporting of medical debt will remain in place. Most notably, in April 2023, Equifax, Experian and TransUnion agreed to stop reporting medical debt under $500. And debt collection agencies will still be required to wait at least a year to report any medical debt to the bureaus.

How to deal with outstanding medical debt

Paying off your medical debts is still a good idea, whether they appear on your credit report or not. And even if the reporting of medical debt is eliminated in the future, it wouldn’t erase the debt itself. Creditors can still pursue debt collection through other means, including lawsuits, wage garnishment or additional collection efforts.

With this in mind, the following tips may help you successfully deal with your medical debts.

Review your outstanding medical bills

If you have had to deal with medical issues, carefully review your bill and find out exactly what amount you are responsible for and what your insurance will pick up. Also, watch out for any billing errors and contact your medical provider’s billing department right away to discuss any potential issues.

Negotiate with your medical provider

If you cannot pay the bill right away, you may attempt to negotiate a settlement or payment plan with your medical provider. Medical billing advocates can also negotiate on your behalf. You may be able to get some help paying your bills from nonprofits, religious organizations or government assistance.

If your debt goes to collections, check your credit report to make sure it’s reported correctly. If you do find a mistake, follow up with the collections agency to sort out the matter. If that doesn’t work, you can dispute the mistake with the credit reporting agency.

Explore other payment options

Unexpected medical bills can strain your finances, leaving you searching for ways to manage the costs. If the options above don’t work for you, consider using a credit card with a promotional 0 percent APR to spread out payments without accruing interest. Make sure you have a solid plan to pay off the balance before the promotional period ends. Otherwise, you will pay a high interest rate on the remaining amount.

If a 0 percent APR credit card isn’t an option, an emergency personal loan could be a practical alternative. While you won’t avoid interest entirely, the average personal loan rate is typically lower than standard credit card rates, potentially making this product a more predictable and manageable choice.

Bottom line

The yo-yo of removing and retaining medical debt information from credit reports makes a hard situation for many even more challenging. In fact, almost 10 million consumers had medical debt facing collections and impacting their credit in August 2024, according to a 2025 report by the Urban Institute.

If you’re facing medical billing challenges, start by working with your healthcare provider and insurance company to resolve disputes or set up payment plans. Nonprofit organizations and medical billing advocates may also offer valuable assistance in negotiating or reducing your bills.

How to get debt relief

You can get debt relief from lenders, debt relief companies and credit counseling agencies.

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Ultimately, while policy changes affect the financial burden of medical debt, it’s still necessary to stay proactive and handle your debt as possible.

Frequently asked questions

• How long will it take for my credit score to fall after the rule’s reversal?
  

  The rule was slated to take effect in March 2025 but was never implemented before it was struck down in July. That means your credit report will be unchanged.

• Do I have to pay medical debt that “falls off” my credit report?
  

  Medical debt stays on your credit report for up to seven years, but once it falls off, your debt remains. Creditors and collection agencies can still pursue payment through legal means or other collection methods. Paying off your medical debt can prevent further financial or legal complications.