A security officer works inside the Consumer Financial Protection Bureau building headquarters in February in Washington. (AP Photo/Jacquelyn Martin, File)
Draft would sideline states’ credit report protections
The Trump administration is advancing a plan to override state laws that restrict how consumer credit reports handle medical and other debt. The Consumer Financial Protection Bureau (CFPB) has drafted a new rule under the Fair Credit Reporting Act (FCRA) clarifying that federal law takes precedence over state regulations governing how debts are reported to major credit bureaus such as Experian, Equifax, and TransUnion.
The move reverses Biden-era policies that allowed states to create their own reporting limits or bans. Over a dozen states currently prohibit medical debt from appearing on consumer credit reports, citing the financial strain such listings can cause.
Medical debt has long been one of the most disputed items on credit files, often due to delays in insurance payments or unexpected medical costs not covered by insurance. In 2023, the three major credit bureaus announced they would stop reporting medical debts under $500—a change that removed roughly 70% of all medical debt from credit files. Still, states including New York and Delaware went further, enacting complete bans on reporting medical debts.
The CFPB, which is primarily focused on repealing or revising regulations from the previous administration, stated in its proposed rule that Congress intended to establish “uniform national standards for the credit reporting system” through the FCRA. The bureau argues that differing state laws undermine that intent.
According to the Kaiser Family Foundation, Americans collectively owe about $220 billion in medical debt. The burden is especially heavy in states such as South Dakota, Mississippi, West Virginia, and Georgia, where roughly one in six residents carries outstanding medical debt. Such debt can hinder a person’s ability to qualify for a mortgage, car loan, or credit card, even when the debt stems from unavoidable healthcare expenses.