Do medical bills affect your credit? New federal rules may cause changes, but you can still protect yourself

Your medical debt was about to be removed from your credit reports — until a federal judge in Texas struck down the Consumer Federal Protection Bureau (CFPB) rule that would have made it happen.

The medical debt rule issued by the CFPB during the Biden administration would have stopped credit reporting agencies from reporting any medical debts, potentially erasing an estimated $49 billion in unpaid medical bills from credit reports and boosting credit scores by an average of 20 points for approximately 15 million Americans, according to the CFPB. Additionally, the rule would have prohibited lenders from considering medical debt when making credit decisions.

But, the CFPB has no power to define what’s permitted in consumer credit reports, Judge Sean D. Jordan of the Eastern District of Texas ruled in July, concluding a 13-month legal battle over the proposed rule.

“To see that roll back right before it was implemented was pretty devastating,” says Lindsey Zischkale, a policy analyst at Undue Medical Debt, a nonprofit that uses donations to purchase bundled medical debts, offering relief to financially vulnerable Americans.

The court’s decision doesn’t only vacate the rule — it also prohibits the CFPB from enacting a similar rule in the future, according to Berneta Haynes, a senior attorney at the National Consumer Law Center (NCLC), one of the organizations that opposed the overturning of the rule. 

Unfortunately, the ruling means that, if you have medical debt, you’ll need to take matters into your own hands so that you don’t harm your financial health as you take care of your physical health. Here are some steps you can take to avoid credit damage — and a few protections you can still rely on.

Impact of medical debt on credit reports

Opponents of the rule, which included Republican lawmakers and consumer reporting industry associations, say it’s fair for lenders to know and consider medical debt in lending decisions. After all, it is part of your financial profile and could affect your ability to repay debt. But while that might be true, it’s still a different type of debt in at least one key way.

“Medical debt is a very distinct type of debt. It’s not a debt of choice,” Zischkale says. “It’s a debt of necessity. Nobody chooses to get sick or be born with a chronic illness.”

For Scott Whitman, 35, that distinction is clear. A severe infection landed him in a coma in his early 20s, leaving him hospitalized for six weeks. His medical bill ballooned to $280,000. Whitman also developed seizures. As a result, he was constantly in and out of the hospital and ended up living with his parents to shoulder the costs.

“The bills just kept adding up over time and just getting higher and higher. It was such a difficult situation,” he says.

Vulnerable groups, including women, people of color and people with disabilities, are over-represented in medical debt, says Zischkale. Data from the Survey of Income and Program Participation, as analyzed by The Peterson Center on Healthcare and KFF last year, backs this up:

• Adults who live with a disability are more likely than those without a disability to report having medical debt (13 percent vs. 6 percent)
• Women are more likely to report having medical debt than men by a small margin (9 percent vs. 7 percent)
• 13 percent of Black Americans report owing medical debt, compared to 8 percent of White and 3 percent of Asian Americans

Any negative marks or excessive debt in credit reports can impact a person’s ability to access credit. For instance, Zischkale recalled a woman Undue Medical Debt worked with who was denied a mortgage due to a minor unpaid medical debt in her credit report. 

Whitman also experienced first-hand how medical debt on credit reports prevents credit access.

“It was really difficult. I definitely couldn’t get a car loan or anything,” he says. “When I finally was seizure-free long enough to get my license… I had to save up cash and buy a 15-year-old Honda.”

The car needed a lot of work. With his income, Whitman shares, he could have afforded a $400 monthly payment on a newer, more reliable vehicle. His credit made it impossible.

But credit history can also be considered in situations that have little to do with lending, such as job or rental applications. That means someone’s health condition can inadvertently cost them a job or housing, though protections still exist in certain states, and financial assistance might be available. 

How to prevent medical debt from harming your credit

So where does all this leave you if you have medical debt that’s hurting (or potentially could hurt) your credit score? 

“Don’t stop taking your medications or seeing the doctor,” Zischkale says. “Try your absolute hardest to continue the care you need.” 

The next important thing is ensuring you understand your state legislation, medical debt reporting rules set by the credit bureaus and additional ways to protect yourself financially. 

Know your state protections

The court’s opinion included commentary on state laws, which might make it seem as though certain state protections are also void now. The judge said that if federal law allows medical debt in credit reporting, state laws can’t prohibit that. However, this statement is ”just dicta”, according to Haynes, meaning it has no legal effect. 

“The status of those state laws would have to be contested in a court with [relevant] jurisdiction,” she says.

That means, at least for now, the following 15 states still have laws against medical debt appearing on credit reports.

Check your credit report

Even if you don’t live in a state with robust protections, you can rely on medical debt reporting rules announced by the credit bureaus in 2022, Haynes says. According to these rules:

• Medical debt under $500 should not be reported to credit bureaus.
• Paid medical debts, including paid collections, should be removed from credit reports.
• Debt collection agencies have to wait at least a year before reporting medical debt to the credit bureaus.

Despite these rules, it’s a good idea to check your credit reports to ensure they don’t contain medical debt accounts that shouldn’t be there. And if you find any, you can dispute such accounts with the credit bureau that’s reporting them. 

This tactic worked for Whitman. His coworker suggested disputing old medical bills, and he followed her advice.

“I disputed all of them, and sure enough, 30 percent or more of them went right away,” he says.

Check your medical bills

Medical billing errors, such as duplicate charges, incorrect coding or even services the patient hasn’t received, are considered common — and they can make your treatment more expensive than it should be.

Of course, when you’re dealing with health issues, trying to decode your medical bill is probably the last thing you want to do. Still, doing so might save you money.

“Double-check your bill… the same way you’d check your credit card statement,” Zischkale suggests.

If something is unclear or doesn’t seem right, don’t hesitate to reach out to the hospital’s billing department for an explanation or to correct the errors.

You might not be responsible for ‘surprise’ bills

The No Surprises Act (NSA) protects you from potentially paying out-of-network charges for emergency care, if you’re insured or uninsured. So, before you jump to any conclusions about your medical debt, ensure you’re legally responsible for it. Learn about your rights via the Centers for Medicare & Medicaid Services.

Ask about financial assistance

Both Haynes and Zischkale urge people to ask about financial assistance.

“Remember that things like financial assistance are available at nonprofit hospitals, which is the majority of hospitals, and even some for-profit hospitals have financial assistance policies for which one may be eligible based on their income,” Haynes says.

It can be helpful to contact your hospital about it even if your hospital stay was over a year ago. Protections in certain states make it possible to get financial assistance retroactively, Zischkale says.

“Let them know about other large bills you have, even if your income is good… because you may still qualify if you have a higher debt burden,” she adds.

You can usually look up information about financial assistance policies in hospitals on their websites in the patient billing section. It’s often listed on the back of a bill in small print as well, Haynes says. Even if you aren’t able to access financial assistance, you may be able to negotiate a settlement or payment plan with your medical provider. Medical billing advocates can also negotiate on your behalf.

Look into nonprofits

Nonprofit organizations can also be of help. For example, Whitman worked with Undue Medical Debt who helped him get rid of a portion of his medical debt.

“They really changed my life,” he says. Today, his credit score is around 780, and he has financed a new car. “[Before], some banks wouldn’t even give me an account.”

Other organizations that might be of help include:

• Patient Access Network Foundation offers financial assistance to help pay for medication copays, insurance premiums and more
• HealthWell Foundation also helps eligible insured individuals with copay costs, premiums and deductibles, as well as out-of-pocket medical expenses
• Dollar For acts as an advocate helping patients apply for hospital charity care

Understand your insurance needs

If you have the option to pick your health insurance plan or customize it, make sure it meets your needs: from any medical care you anticipate to prescriptions and chronic conditions. Decide if you’d rather pay a higher monthly premium for lower out-of-pocket costs when you need care or vice versa, and understand all the costs you might incur beyond the premium. Some examples include deductibles, copays and your out-of-pocket maximum. 

“Access to health insurance is the best protection against medical debt,” Zischkale says. “It’s not perfect, but it’s the best thing we have.”

Whitman is a licensed insurance agent now. This line of work allowed him to get educated on various insurance options — and help others, too.

“If people had access to this knowledge and these programs, they wouldn’t have medical debt,” he says. “I talked to so many people every day who didn’t even know they could get insurance, whether I get it for them through Obamacare or send them Medicaid.”

If you don’t have access to employer-provided insurance, such options might still be available to you. Browse the Health Insurance Marketplace to see what kind of plans and savings you may qualify for. For example, you may be eligible for free or low-cost coverage and income-based subsidies.

Avoid using credit cards for medical bills

Ten percent of U.S. adults with credit card debt say that their balance comes from medical bills, according to Bankrate’s 2025 Credit Card Debt Survey. However, Zischkale warns against using cards in this way, as turning medical debt into credit card debt removes any federal protections you still have when it comes to your credit reports and scores.

If paying your medical bills with a credit card is your only option, consider using a credit card with a promotional 0 percent APR to spread out payments without accruing interest. Make sure you have a solid plan to pay off the balance before the promotional period ends. Otherwise, you will pay a high interest rate on the remaining amount.

If you don’t qualify for a 0 percent APR card (or if you won’t be able to pay off the balance before the promotional period expires), an emergency personal loan could be a practical alternative. While you won’t avoid interest entirely, the average personal loan rate is typically lower than standard credit card rates, potentially making this product a more predictable and manageable choice.

The bottom line

While the CFPB ruling that would remove all medical debt from credit reports was struck down, there are still protections you can rely on to minimize its impact on your credit scores. Additionally, you can take steps to reduce the amount of medical debt you have, from picking the right insurance plan to exploring financial assistance options.

“It’ll be a long battle to get back up,” Whitman says. “For me, it probably took six to seven years to get my life together… It shows you can do it. It can definitely be done.”