Medical Debt and Your Credit Report: What the Rules Actually Are in 2026

On January 7, 2025, the Consumer Financial Protection Bureau finalized a rule that would have taken medical bills off credit reports entirely. Lenders would have been barred from using medical debt to decide if you get a loan. It made headlines for about a week.

It never took effect. Industry trade groups sued, and the Bureau, under new leadership, ended up agreeing with them. On July 11, 2025, a federal court in the Eastern District of Texas vacated, or threw out, the rule in a case called Cornerstone Credit Union League v. CFPB, holding that it went beyond the Bureau’s authority under the Fair Credit Reporting Act.

If you only caught the first headline, you might think medical debt can’t touch your credit anymore. That’s not the law. Medical collections can still show up on your reports, and lenders can still see them.

You’re far from unprotected, though. Three credit bureau policies keep small and paid medical bills off reports, though big unpaid ones can still show. About fifteen states have passed their own bans. Federal tax rules limit what nonprofit hospitals can report and when. And you still have the same right to dispute a wrong entry that you’ve always had. None of these works automatically in every case, and each one has limits.

15 million people, $49 billion. Even after the credit bureaus made their changes, that many Americans still had that much medical debt in collections on their credit reports, according to a CFPB report using June 2023 data.

Before those changes, the CFPB’s estimate was $88 billion. The bureaus’ policies swept out the small bills. What remained were the big ones, and the average medical collection left on reports rose from about $2,000 to more than $3,100.

Four layers that still protect you

The three credit bureau rules

Equifax, Experian and TransUnion made three changes between July 2022 and April 2023. The CFPB summed them up in one line: anything already paid or under $500 should no longer be on your credit report.

Paid medical collections come off. That’s unusual. A paid credit card collection can sit on your report for up to seven years. A paid medical collection should disappear.

Nothing under $500. Since April 11, 2023, medical collections with a balance below $500 aren’t supposed to appear at all, paid or unpaid.

Nothing in the first year. An unpaid medical bill shouldn’t show up as a collection until at least a year has passed. The old practice was about six months. The extra time lets you sort out insurance, appeal a denial or apply for a hospital’s financial assistance.

Two limits matter here. These are company policies, not statutes; they’ve held since 2022 and 2023, but no law makes the bureaus keep them. And they only cover debt reported as a medical collection. Paid the hospital with a credit card, a personal loan or a medical credit card? That balance is now ordinary debt, and none of the three rules touches it.

Nothing here erases the debt, either. A $400 bill that can’t appear on your report is still owed. A collector can still call about it and, in some cases, sue.

Where state law goes further, and the new doubt

Experian’s consumer guidance lists fifteen states that bar medical debt from being reported or used in credit decisions: California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia and Washington. The details differ. California’s law, SB 1061, was signed in September 2024 and took effect in 2025; it bars credit reporting agencies from including medical debt in reports and bars lenders from counting it against you. New York has its own Fair Medical Debt Reporting Act.

On October 28, 2025, though, the CFPB published an interpretive rule saying the Fair Credit Reporting Act generally preempts, or overrides, state laws that touch broad areas of credit reporting. That reversed the Bureau’s own 2022 reading, which had said the opposite. An interpretive rule is the agency’s reading of the law. It isn’t a court ruling. As far as we could confirm, the state laws remain on the books and in force, but expect the question to be fought out in court.

If you live in one of those states and see a medical collection on your report, you’ve got an extra ground for a dispute. Anywhere else, the three bureau rules are your main protection.

Rules only help if your own reports follow them. Checking takes about an hour and costs nothing, and the dispute process has a few turns that are easy to get wrong.

How to check your reports and dispute a medical entry

1. Pull all three reports. Go to AnnualCreditReport.com, the only site authorized to provide the free reports federal law guarantees. You can check weekly at no cost. Get all three, because collectors don’t always report to every bureau.
2. Find the collections section. Medical collections usually appear under the name of a collection agency, not the hospital. Look for an “original creditor” line naming a medical provider, lab or ambulance company.
3. Test each entry against the three rules. Was it paid, by you or by insurance? Is the balance under $500? Is it less than a year old? A yes to any of those means it shouldn’t be there. For a nonprofit hospital bill, also check the timing. If it was reported within 120 days of the first bill, or without a written 30-day warning, raise that with the hospital’s billing office.
4. Check it against your own records. Match the entry to a bill and an explanation of benefits. Look for a debt your insurer already paid, a bill still under appeal, an amount that doesn’t match, or an account that isn’t yours.
5. Dispute with the bureau in writing. The CFPB suggests including your contact details, the account number, a clear explanation of what’s wrong, a copy of the report with the item marked, and copies of supporting documents. Send copies, never originals. Certified mail with a return receipt gives you a date.
6. Dispute with the company that reported it. Send the same package to the collection agency or provider. Furnishers (the companies that send data to the bureaus) generally must investigate and respond within 30 days, and if they can’t verify the entry, they have to correct or remove it and tell the bureaus.
7. Check again. Pull the report after 30 to 45 days. If the item’s still there and you believe it’s wrong, file a complaint with the CFPB at consumerfinance.gov/complaint or call (855) 411-2372.

A collector that just contacted you about a medical debt you don’t recognize starts a separate clock. Write to it within 30 days of its first notice and ask it to validate the debt. It has to pause collection until it responds.

What if the debt is real and over $500?

If you plan to apply for a mortgage or refinance in the next year, clear or correct any medical collection first, because the older scores mortgage lenders use can count it in full.

And find out which score is in play. Not all credit scores treat medical debt the same way. According to Experian, VantageScore 3.0 and 4.0 don’t count medical collections at all, while FICO 9 and FICO 10 give unpaid medical collections less weight than other collections.

Mortgage lending has long relied on older FICO versions that treat medical collections like any other collection. So a medical collection may barely move the score you see in a free app and still weigh on the score a lender pulls. Ask any lender which version it uses, and check the fine print under your app’s score for the model name.

Mistakes that make it worse

Moving the bill onto a card. Once a hospital bill becomes a credit card balance, it loses the one-year delay, the $500 floor, the paid-removal rule and any state protection. A missed card payment can be reported after 30 days.

Treating a small bill as gone. A bill under $500 stays off your report, but it isn’t forgiven, and a collector can still pursue it.

Paying a collector before checking the debt. Validate first. Insurance may already have paid, or the hospital’s assistance policy may cover it.

Making a small “good faith” payment on a very old debt without checking your state’s rules. In some states a partial payment can restart the period in which a collector may sue.

Paying for help versus doing it yourself

Everything above is free. So what do paid services add?

A credit repair company files the same disputes you could, just on your behalf. It has no legal power you don’t, and it can’t lawfully remove accurate information. It also can’t take your money until the promised work is done, and you get three business days to back out of the contract; both come from the federal Credit Repair Organizations Act. If you’re hiring one because you don’t have the time, compare fees and look for those two terms in the contract. And when a company guarantees it’ll get collections removed from your report, it’s promising something that isn’t up to it.

Credit monitoring is worth more at some moments than at others. A pending dispute is one. An account sitting with a collector is another, and so are the months before a big loan application. You may already have a basic version, since many banks and card issuers throw it in at no charge. What the paid versions add is alerts from all three bureaus and, often, identity theft features.

If the debt is large and you can’t pay it, look at the debt before you look at the report. Hospital financial assistance, a billing advocate (someone who reviews medical bills and negotiates them for you) or a nonprofit credit counselor can change the amount you owe, and the credit report follows from that.

If I had one free hour this week, I’d spend it on the three reports. A medical collection that’s paid, under $500 or less than a year old breaks the bureaus’ own rules, and a written dispute is how you get it taken off.