Medical Debt Can Be Removed From Credit Reports (Maybe)

Back in 2022, the Consumer Financial Protection Bureau (CFPB) suggested that medical debt information should not be used to ding people’s credit rating. One of their arguments was that medical debt is not a good indicator of paying back debt and thus not relevant to one’s credit score.

The CFPB issued a final ruling on January 7, 2025 to require the credit reporting agencies to remove medical debt from consumer’s credit reports and to not allow lenders to use medical information when making decisions on whether to grant a loan. This second part removed the ability for lenders to require equipment, such as an expensive prosthetic leg, as collateral for a loan. This will help consumers who, due to a medical crisis, ended up with a lot of debt that they wouldn’t ordinarily have had. I was hoping to provide information on how to erase medical debt from your credit report.

But There Is More To The Story

It is important to note the date of the final ruling: January 7, 2025, with the rule to take effect 60 days later. Since then, things have gotten complicated with two major changes.

The first is that on that same date, Cornerstone Credit Union League (representing credit unions) and the Consumer Data Industry Association (representing the credit reporting agencies) filed a lawsuit opposing this final rule claiming the CFPB was going too far in its rulemaking. The CFPB was working on defending the rule.

But then a new administration came into power and all government litigation was requested to be put on hold. So, the CFPB, under its new leadership, reversed course and requested a stay of the litigation, which was granted. They also requested a delay of 90 days before the rule went into effect.

But yet, there is more: the National Consumer Law Center which is not a government organization, filed in the lawsuit that they wanted to intervene on the government side and argue that the rule was fair and reversing it would cause harm to people who had medical debt.

What if you have medical debt and it might be affecting your credit rating?

Absent a final outcome, there are still a few things to do if you have medical debt due to a medical situation that cost more than you were able to pay.

• Go to the credit reporting agencies and request it be removed. Since they had been voluntarily removing information since 2022, they might do it for you. Absent a requirement to remove it, bringing it to their attention may be enough for them to remove it.
• Several states have enacted laws requiring the information to be removed. If you live in California, Colorado or New York, then the credit reporting agencies are required by state law to remove your medical debt information.

For the rest of us, we’ll just have to wait and watch how this plays out to see if the CFPB continues to pursue making this a rule at the national level and if and when it will go into effect. Stay tuned.