NCLC Publishes Article on Medical Debt and Credit Reports

Chi Chi Wu of National Consumer Law Center (NCLC) recently published an article on medical debt in consumer credit reports. A summary of the article is below.

Roughly 15 million Americans currently have medical debt on their credit reports. This practice is widely criticized, as such debt is often unplanned, unavoidable, and inaccurately billed, with little predictive value regarding a borrower’s creditworthiness. In response, actions have been taken on three fronts: voluntary measures by credit reporting agencies (CRAs), rulemaking by the Consumer Financial Protection Bureau (CFPB), and new state legislation.

Voluntary Actions by Credit Bureaus

Since 2022, Equifax, Experian, and TransUnion (the nationwide CRAs) have agreed to:

• Exclude medical debts under one year old;

• Remove paid medical debts entirely;

• Exclude debts under $500, even if unpaid.

They now also offer free weekly credit reports, which consumers are encouraged to access through annualcreditreport.com rather than directly through CRA accounts, to avoid agreeing to arbitration clauses.

Federal Rule Struck Down

In January 2025, the CFPB issued a rule banning CRAs and lenders from including or considering medical debt in credit decisions. However, in Cornerstone Credit Union League v. CFPB, a federal court vacated the rule, holding it exceeded the CFPB’s statutory authority. Although the decision includes statements suggesting the Fair Credit Reporting Act (FCRA) may preempt state laws, these comments are considered non-binding dicta and were not part of the court’s official ruling.

State-Level Protections

Fifteen states—including California, Illinois, New York, and Colorado—have enacted laws limiting or banning medical debt from credit reports. These statutes vary, targeting:

• CRAs directly,

• Debt collectors and providers (furnishers), or

• Creditors using such information.

Some laws are already in effect; others will be by January 2026.

FCRA Preemption Debate

The article clarifies that while the Cornerstone court suggested FCRA may override state laws, this assertion was not central to the case and lacked legal analysis. Established case law—such as Consumer Data Indus. Ass’n v. Frey—supports a narrow reading of FCRA preemption, suggesting that many state protections may still stand.

NCLC recommends additional legal safeguards, such as contract clauses that bar debt collectors from reporting medical debts, to reinforce state-level protections against future preemption challenges.

You can access the entire article here.