Your Unpaid Medical Debt Won't Be Erased From Credit Reports

Takeaways

• A recent federal court ruling reversed a rule that would have removed medical debt from credit reports, meaning this debt can continue to negatively impact credit scores.
• Older adults are disproportionately affected by medical debt due to fixed incomes and health issues, facing reduced borrowing opportunities and financial instability.
• While federal protection is now void, some states offer protections. Older adults can also take steps such as verifying their bills, seeking financial assistance, and negotiating with collectors.

The Consumer Financial Protection Bureau (CFPB) finalized a Biden-era rule in January 2025 that was designed to remove medical debt from consumer credit reports. Its aim was to protect consumers from the financial consequences of unpredictable and burdensome medical bills. However, last month, a federal judge reversed this rule.

U.S. District Judge Sean Jordan of the Eastern District of Texas ruled that the CFPB had exceeded its authority under the Fair Credit Reporting Act (FCRA). The FCRA permits credit reporting agencies to include coded medical debt in credit reports and allows creditors to use that information in lending decisions. As a result of the rule reversal, medical debt can continue to appear on credit reports, affecting credit scores and access to credit.

Had the rule stayed in place, the CFPB estimates that 15 million Americans would have seen $49 billion in medical debt removed from their records, with average credit score increases of around 20 points and about 22,000 more mortgage approvals annually. CFPB research has shown that medical debt isn’t a reliable predictor of creditworthiness, since it is often the result of uncontrollable circumstances, such as emergencies, billing errors, or insurance processing issues.

Why and How This Affects Older Adults

Medical debt disproportionately burdens older Americans, even those covered by Medicare, since they are more likely than others to have fixed incomes and experience health-related issues. In 2020, nearly 4 million adults aged 65 and older were unable to fully pay their medical bills, amounting to $53.8 billion in unpaid bills.

According to KFF research, more than one in five Medicare-age adults in the United States reported having medical-related debt in 2022. Among them, 30 percent were contacted by collection agencies, and 23 percent said their credit scores were negatively affected by medical bills.

With medical debt on their credit reports, older adults may face reduced borrowing opportunities or steeper interest rates on auto or home loans. This can hinder their ability to secure housing, auto financing, or necessary medical equipment. For those already living on fixed incomes, the added burden of medical debt may threaten retirement savings, financial stability, and peace of mind.

Some States Protect Residents With Medical Debt

Although the federal rule is now void, many states have enacted laws to shield consumers from medical debt reporting. According to the Consumer Federation of America, 15 states prohibit or restrict medical debt from appearing on credit reports. Older adults in states with such protections, including many with strong advocacy infrastructures like AARP, may still benefit. Others, however, especially in states without protections, face heightened risks.

What Older Adults Can Do

Though the federal safety net may be pulled back, older adults with medical debt can still take steps to minimize harm:

• Verify billing accuracy. Challenge incorrect bills or fight insurance denials. Billing mistakes are surprisingly common.
• Seek out available financial-assistance programs. Some hospitals offer sliding-scale or income-based aid. Nonprofit advocates, such as Dollar For and the Medicare Rights Center, can help navigate these options.
• Consider negotiating with debt collectors. Repayment plans or settlements may prevent collections from further damaging your credit score.
• Monitor your credit reports. Ensure that your medical debt is coded correctly and removed when paid, and dispute inaccuracies promptly.
• Advocate for medical debt reform. Support expanding state-level protections or federal legislation to limit the effects of medical debt in credit reporting.

Additional Reading

The July 2025, ruling marks a setback for efforts to reduce the financial harm of medical debt. Older Americans, who often face steep health care costs and may rely on credit to maintain stability, are particularly affected. Without federal protections, state laws and individual actions are the remaining lines of defense. Pending national reforms, credit health for older adults hinges on awareness, advocacy, and available local safeguards.

For additional reading about medical costs and related debt, check out the following articles:

• Should You Use a Medical Credit Card?
• Q&A: How Debt Collection Works When You’re in a Nursing Home
• Consider These Medical Expenses When Planning for Retirement
• Can Social Security Benefits Be Garnished to Pay Debts?