Your Unpaid Medical Debt Won’t Be Erased From Credit Reports

Takeaways

• A recent federal court ruling reversed a rule that would have removed medical debt from credit reports. This means the debt can continue to negatively impact credit scores.
• Older adults are disproportionately affected by medical debt. Fixed incomes and health issues make them more vulnerable, reducing borrowing opportunities and financial stability.
• While federal protection is now void, some states offer safeguards. Older adults can verify bills, seek financial assistance, and negotiate with collectors to protect themselves.

The Consumer Financial Protection Bureau (CFPB) finalized a Biden-era rule in January 2025 to remove medical debt from consumer credit reports. The rule aimed to protect consumers from the financial consequences of unexpected medical bills. However, a federal judge has reversed it.

U.S. District Judge Sean Jordan of the Eastern District of Texas ruled that the CFPB exceeded its authority under the Fair Credit Reporting Act (FCRA). The FCRA allows credit reporting agencies to include coded medical debt in reports and permits creditors to use that information for lending decisions. As a result, medical debt can continue to appear on credit reports, affecting scores and access to credit.

If the rule had remained, the CFPB estimated 15 million Americans would have seen $49 billion in medical debt removed. Average credit scores would have increased by around 20 points, and about 22,000 more mortgage approvals would have occurred annually. CFPB research shows medical debt isn’t a reliable predictor of creditworthiness. It often results from emergencies, billing errors, or insurance processing issues.

Why and How This Affects Older Adults

Medical debt disproportionately burdens older Americans, even those with Medicare. They are more likely to have fixed incomes and face health-related issues. In 2020, nearly 4 million adults aged 65+ could not fully pay their medical bills, totaling $53.8 billion.

According to KFF research, over 20% of Medicare-age adults had medical-related debt in 2022. Of these, 30% were contacted by collection agencies, and 23% reported negative impacts on credit scores.

Medical debt on credit reports can limit borrowing opportunities or increase interest rates for auto and home loans. It may affect housing, financing, or essential medical equipment. For those on fixed incomes, medical debt can threaten retirement savings, financial stability, and peace of mind.

Some States Protect Residents With Medical Debt

Even though the federal rule is void, many states protect consumers from medical debt reporting. According to the Consumer Federation of America, 15 states restrict or prohibit medical debt on credit reports. Older adults in these states, including those supported by advocacy groups like AARP, can benefit. Others, in states without protections, face higher risks.

What Older Adults Can Do

Even without federal protections, older adults can take steps to reduce harm from medical debt:

• Verify billing accuracy. Challenge incorrect bills or fight insurance denials. Billing mistakes are common.
• Seek available financial-assistance programs. Some hospitals provide sliding-scale or income-based aid. Nonprofits like Dollar For and the Medicare Rights Center can help.
• Negotiate with debt collectors. Repayment plans or settlements may prevent further credit damage.
• Monitor credit reports. Ensure medical debt is coded correctly and removed when paid. Dispute inaccuracies promptly.
• Advocate for medical debt reform. Support state or federal legislation to limit the effects of medical debt on credit reports.