The Quick Version
- A federal rule that would have erased most medical debt from credit reports was struck down by a court in 2025, meaning medical bills can still affect your credit score in many states.
- Black households carry medical debt at higher rates than white households, even at similar income levels, according to research from the Urban Institute and KFF.
- A growing number of states have passed their own laws limiting or banning medical debt on credit reports, so check what protections exist where you live.
- Nonprofit hospitals are legally required to offer financial assistance programs. Ask for an application before you agree to a payment plan or let a bill go to collections.
For a few months in 2025, it looked like medical debt was about to disappear from credit reports nationwide. A federal court had other plans, and the rule that would have made that change was struck down before it took effect, leaving patients back where they started in most of the country.
What Actually Happened to the Rule
In early 2025, the Consumer Financial Protection Bureau finalized a rule that would have removed medical debt from credit reports and barred lenders from using it in credit decisions. A federal court in Texas vacated the rule later that year, ruling that the agency had exceeded its authority under the Fair Credit Reporting Act. That means, as of now, medical debt can still show up on your credit report and can still drag down your score, unless your state has passed its own protection.
Check What Your State Actually Does
A growing list of states, including Colorado, New York, and several others, have passed their own laws limiting how medical debt can appear on credit reports or barring it from credit reports entirely. Protections vary widely by state, so it is worth a quick search for your state’s medical debt credit reporting law before you assume you have no protection, or that you have more than you actually do.
Why This Hits Black Households Harder
Research from KFF and the Urban Institute has repeatedly found that Black adults report medical debt at higher rates than white adults, even after accounting for income, largely tied to gaps in insurance coverage, higher rates of chronic conditions requiring ongoing care, and less accumulated wealth to absorb a large bill. Medical debt does not just affect credit scores. It shapes whether people delay future care, including care for the very conditions driving the debt in the first place.
The Financial Assistance Programs Hospitals Do Not Advertise
Nonprofit hospitals, which make up the majority of hospitals nationwide, are required under federal tax law to maintain a financial assistance policy, sometimes called charity care, that can reduce or eliminate a bill for patients under a certain income threshold. Most hospitals do not bring this up unless you ask. Before agreeing to a payment plan or letting a bill go to collections, request the hospital’s financial assistance application directly, ideally before the bill is due. Some programs apply retroactively to bills already sent to collections, so it is worth asking even if a bill has already moved past you.
What To Do If a Bill Is Already Wrong or Overwhelming
Ask for an itemized bill and check it against what you remember receiving. Billing errors are common, and disputing a specific charge can sometimes resolve the issue faster than negotiating the total. If the balance is accurate but you cannot pay it in full, most hospitals will negotiate a lower lump sum or a no interest payment plan rather than send the account to collections, since collections recovers less money for them in the long run. You are allowed to ask for that option directly instead of waiting for it to be offered.
A Practical Note on Credit Reports
Under the Fair Credit Reporting Act, you still have the right to dispute any medical debt entry you believe is inaccurate, whether it involves the amount, the date, or whether the debt is even yours. Disputes go through the credit bureau, not the hospital, and bureaus are required to investigate within 30 days.
Your Next Step
Before medical debt hits collections or your credit report, ask the hospital directly for its financial assistance policy, request an itemized bill, and check whether your state has its own medical debt credit protection law. The Consumer Financial Protection Bureau still accepts complaints about billing and debt collection practices at consumerfinance.gov, and nonprofit credit counseling organizations affiliated with the National Foundation for Credit Counseling can help build a plan if the debt is already overwhelming. The rule that was supposed to make this simpler did not survive, but the tools to protect yourself still exist. They just require asking.
