- Source
- Consumer Financial Protection Bureau
- Decided
- June 18, 2024
- Bottom line
- Medical debt can still appear on credit reports, so reporting errors on medical collections remain worth disputing under the FCRA's ordinary accuracy rules.
Background
Since 2003, the FCRA has generally prohibited creditors from obtaining or using medical information in deciding whether a consumer is eligible for credit, 15 U.S.C. § 1681b(g)(2), unless a regulation permits it. Regulators then created exceptions. The most important, now in Regulation V at 12 C.F.R. § 1022.30(d), let creditors use medical information about debts, expenses, income, benefits, assets, and collateral so long as they treated it no less favorably than comparable non-medical information. That exception is why unpaid medical bills sent to collection have long appeared on credit reports and affected lending decisions.
In 2022 and 2023, the three nationwide credit bureaus voluntarily stopped reporting paid medical collections, delayed reporting unpaid ones for a year, and removed medical collections with original balances under $500. The CFPB’s proposal stated that even after those changes, 15 million Americans still had $49 billion in medical bills on their reports. Medical bills are frequently disputed, subject to insurance delays, and billed in error, which makes them a recurring source of credit reporting inaccuracies.
What changed
On June 18, 2024, the CFPB published a proposed rule (89 Fed. Reg. 51682), with comments due August 12, 2024. As described in the proposal, it would have:
- removed the financial information exception in § 1022.30(d) as applied to medical debt, so that creditors generally could not obtain or use information about medical debts in credit eligibility decisions;
- provided that a consumer reporting agency generally may not furnish to a creditor a consumer report containing medical debt information that the creditor is prohibited from using; and
- removed the exception for medical information about assets and collateral, reflecting the CFPB’s concern about lenders taking necessary medical devices as collateral.
Our take
We agree with the policy goal, and we think the proposal correctly identified the problem: medical debt is a poor predictor of creditworthiness and a frequent source of errors. But the legal route was vulnerable. The FCRA itself contemplates that credit bureaus may report medical debt information in coded form that does not identify the provider or the nature of the treatment, 15 U.S.C. §§ 1681b(g)(1) and 1681c(a)(6). Using rulemaking to bar nearly all such reporting to creditors invited the argument that the CFPB was overriding the statute rather than implementing it.
Later developments: the CFPB finalized the rule on January 14, 2025 (90 Fed. Reg. 3276), with an effective date of March 17, 2025. Industry groups, including the Consumer Data Industry Association and the Cornerstone Credit Union League, sued in the Eastern District of Texas. After a change in leadership, the CFPB joined the plaintiffs in asking the court to set the rule aside. On July 11, 2025, the court vacated the rule, concluding that it exceeded the CFPB’s authority under the FCRA. As a result, the federal rule never took effect, although several states have enacted their own limits on medical debt reporting, whose interaction with FCRA preemption is a separate and contested question.
What it means if your report is wrong
Medical collections can still appear on your credit reports. Paid medical collections and those under $500 should not appear on reports from the three nationwide bureaus under their voluntary policies, and unpaid medical collections generally should not appear until a year after they went to collection. If you see medical debt that you paid, that insurance should have covered, that is not yours, or that was reported too soon, dispute it in writing with each bureau and keep the explanation of benefits and billing records. A free case review can assess whether the reporting violates the FCRA, with no fee unless we win.
Sources
Primary
- Federal Register — Proposed rule, Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V), 89 Fed. Reg. 51682 (June 18, 2024)
- Federal Register — Final rule, 90 Fed. Reg. 3276 (Jan. 14, 2025)
Commentary we reviewed
- Ballard Spahr, Consumer Finance Monitor — Federal judge vacates CFPB medical debt rule
- ABA Banking Journal — Texas federal judge vacates CFPB's medical debt rule
Updated November 1, 2026. "Our take" is the firm's opinion. This page is general information, not legal advice, and later decisions may change the law.