The next chapter in the Medical Debt Saga.
In January 2025, the Consumer Financial Protection Bureau (CFPB) finalized a rule that would have removed medical debt from credit reports and prohibited lenders from using medical information in credit decisions. The rule aimed to help around 15 million Americans and eliminate about $49 billion in medical debt from credit reports. It was expected to boost credit scores by an average of 20 points.
On July 11, 2025, a federal judge in Texas struck down the CFPB’s rule, stating that the agency had exceeded its authority under the Fair Credit Reporting Act. The judge ruled that the CFPB could not unilaterally ban the inclusion of medical debt on credit reports
- Medical debt will continue to affect credit scores, including unpaid bills over $500.
- The three major credit bureaus (Equifax, Experian, and TransUnion) had already voluntarily removed medical collections under $500 from reports, and that change remains in effect.
- Paid Medical debts will continue to NOT be reported on Credit Reports.
- The CFPB and consumer advocates argue that medical debt is a poor predictor of creditworthiness and often results from billing errors or insurance issues.
Different Scoring Models
The VantageScore credit scoring models 3.0 and 4.0 do not include medical debt collections in their credit score calculations.
- VantageScore 3.0 and 4.0 have completely removed medical collection data, regardless of the amount owed or the age of the debt
- This change was implemented because VantageScore determined that medical debts are not predictive of a consumer’s creditworthiness
- The removal of medical debt from these models can result in a credit score increase of up to 20 points for affected consumers
This approach contrasts with some FICO models, which still factor in certain types of medical debt, although newer versions have also reduced their impact. Depending on what version of the FICO scoring model you may or may not be getting dinged for medical debt. It would be best to go with a lender who is able to use the VantageScore models when possible.
What can you do if you have Medical Collections on your credit report?
- Check your credit report regularly for errors.
- Negotiate or settle medical bills before they go to collections.
- Request goodwill removals if you’ve paid off a debt.
- Dispute inaccuracies with the credit bureaus.
As always, if you are in need of assistance in having these items removed from your credit report, please contact us here at Credit Law Center where we use the law to protect our clients.
1-800-994-3070
