Medical debt might still hurt your credit score—here’s what changed and how to protect yourself
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If you’ve ever been blindsided by a surprise medical bill, you’re far from alone—and for many older Americans, the impact isn’t just financial stress.
Medical debt has long haunted credit reports, lowering scores and making life harder when applying for loans, renting a home, or even applying for a job.
Earlier this year, it looked like relief was coming, thanks to a rule that would’ve kept medical debt off your credit file and prevented lenders from using that debt when making lending decisions.
But a recent court decision on July 11 has rolled back those protections, leaving many wondering what happens next.
This reversal has left consumer advocates frustrated and older adults vulnerable—especially those who face mounting healthcare expenses on a fixed income.
While some reforms have already taken hold, the court’s ruling means medical debt can still follow you around, even if you’re actively working to resolve it.
So what happened? And what can you do about it? Let’s break it down.
The rule that was supposed to help—now overturned
A Biden-era rule finalized in January 2021 would have banned medical debt from appearing on credit reports and barred lenders from using a person’s medical debt history to make lending decisions.
The idea was simple: medical bills are often unexpected, complicated, and prone to errors.
Why should they drag down your credit score—or block access to credit—especially when the charges are still being disputed?
The rule was scheduled to take effect in March, but two major financial industry groups—the Consumer Data Industry Association (CDIA) and Cornerstone Credit Union League—sued the Consumer Financial Protection Bureau (CFPB) to stop it.
The lawsuit was backed by the Trump administration, and a stay was issued to delay the rule.
Then on July 11, US District Judge Sean Jordan, appointed during Trump’s first term, vacated the rule entirely. The judge agreed that the CFPB had exceeded its authority under the Fair Credit Reporting Act.
As a result, medical debt—particularly unpaid bills—can still be reported by credit bureaus and affect your creditworthiness.
Also read: Struggling with debt? These 5 categories might qualify for forgiveness
Why medical debt is different
Medical debt isn’t like a credit card or a car loan. You usually don’t choose it.
A medical emergency, surgery, or even a billing error can land you in debt with no warning.
According to a 2022 report by the CFPB, over half of all debt in collections on credit reports is medical.
Even worse, medical bills are almost three times more likely to be disputed than credit card charges.
Patricia Kelmar, senior director at the US PIRG Education Fund, warned, “The problem is still here and will likely get worse.”
She added that many of the 15 million Americans whose credit reports show medical debt aren’t ignoring their bills—they’re still fighting insurance issues or correcting hospital errors, yet being penalized with lower credit scores in the meantime.
Also read: Is your credit score suffering? Here’s how Biden’s new rule could help wipe out your medical debt!
The industry’s argument for keeping medical debt on reports
Not everyone agrees that medical debt should be removed from credit reports.
Dan Smith, president and CEO of the Consumer Data Industry Association, says unpaid medical bills help lenders assess risk.
“Information about unpaid medical debts is an important element in assessing a consumer’s ability to pay,” he said.
Removing that information, he argues, would give lenders an “inaccurate and incomplete picture” of someone’s financial situation.
Also read: At 80, he’s still working—just to pay his late wife’s $80,000 hospital debt
What’s changed—and what hasn’t
The good news is that the major credit bureaus—Equifax, Experian, and TransUnion—have already made some changes to ease the burden:
But if you have an unpaid bill over $500 that’s more than a year old, it could still show up and hurt your score.
Health coverage cuts may make things worse
This court ruling comes as the future of healthcare coverage is also in flux.
A major federal law passed under President Trump is set to cut about $1 trillion from Medicaid and Affordable Care Act (ACA) insurance plans over the next decade, according to the nonpartisan Congressional Budget Office.
That could leave 11.8 million people without coverage. If pandemic-era tax credits for ACA plans aren’t renewed, another 5 million could lose affordable insurance.
For older adults, these shifts could mean more out-of-pocket costs and—ultimately—more medical debt.
Also read: The hidden debt crisis: see where Americans are struggling the most
Tips to protect your credit from medical debt
Even with the court’s decision, there are still steps you can take to safeguard your credit:
This ruling is a reminder that medical debt remains a financial risk, even when it’s not your fault.
But staying informed—and acting quickly when issues arise—can go a long way toward protecting your credit.
Read next: This simple trick could save you thousands on your hospital bill—here’s how
Have you dealt with medical debt affecting your credit? Found a billing error or successfully fought one? Share your experience with The GrayVine community in the comments—we’d love to hear what worked for you.
Medical debt has long haunted credit reports, lowering scores and making life harder when applying for loans, renting a home, or even applying for a job.
Earlier this year, it looked like relief was coming, thanks to a rule that would’ve kept medical debt off your credit file and prevented lenders from using that debt when making lending decisions.
But a recent court decision on July 11 has rolled back those protections, leaving many wondering what happens next.
This reversal has left consumer advocates frustrated and older adults vulnerable—especially those who face mounting healthcare expenses on a fixed income.
While some reforms have already taken hold, the court’s ruling means medical debt can still follow you around, even if you’re actively working to resolve it.
So what happened? And what can you do about it? Let’s break it down.
Many Americans—especially older adults—continue to face long-term credit impacts from medical debt, even when bills are disputed or in error. Image Source: YouTube / Hearst Television.
The rule that was supposed to help—now overturned
A Biden-era rule finalized in January 2021 would have banned medical debt from appearing on credit reports and barred lenders from using a person’s medical debt history to make lending decisions.
The idea was simple: medical bills are often unexpected, complicated, and prone to errors.
Why should they drag down your credit score—or block access to credit—especially when the charges are still being disputed?
The rule was scheduled to take effect in March, but two major financial industry groups—the Consumer Data Industry Association (CDIA) and Cornerstone Credit Union League—sued the Consumer Financial Protection Bureau (CFPB) to stop it.
The lawsuit was backed by the Trump administration, and a stay was issued to delay the rule.
Then on July 11, US District Judge Sean Jordan, appointed during Trump’s first term, vacated the rule entirely. The judge agreed that the CFPB had exceeded its authority under the Fair Credit Reporting Act.
As a result, medical debt—particularly unpaid bills—can still be reported by credit bureaus and affect your creditworthiness.
Also read: Struggling with debt? These 5 categories might qualify for forgiveness
Why medical debt is different
Medical debt isn’t like a credit card or a car loan. You usually don’t choose it.
A medical emergency, surgery, or even a billing error can land you in debt with no warning.
According to a 2022 report by the CFPB, over half of all debt in collections on credit reports is medical.
Even worse, medical bills are almost three times more likely to be disputed than credit card charges.
Patricia Kelmar, senior director at the US PIRG Education Fund, warned, “The problem is still here and will likely get worse.”
She added that many of the 15 million Americans whose credit reports show medical debt aren’t ignoring their bills—they’re still fighting insurance issues or correcting hospital errors, yet being penalized with lower credit scores in the meantime.
Also read: Is your credit score suffering? Here’s how Biden’s new rule could help wipe out your medical debt!
The industry’s argument for keeping medical debt on reports
Not everyone agrees that medical debt should be removed from credit reports.
Dan Smith, president and CEO of the Consumer Data Industry Association, says unpaid medical bills help lenders assess risk.
“Information about unpaid medical debts is an important element in assessing a consumer’s ability to pay,” he said.
Removing that information, he argues, would give lenders an “inaccurate and incomplete picture” of someone’s financial situation.
Also read: At 80, he’s still working—just to pay his late wife’s $80,000 hospital debt
What’s changed—and what hasn’t
The good news is that the major credit bureaus—Equifax, Experian, and TransUnion—have already made some changes to ease the burden:
- Paid medical debts no longer appear on credit reports
- Medical debts under a year old are excluded
- Medical debts under $500 have been removed entirely
But if you have an unpaid bill over $500 that’s more than a year old, it could still show up and hurt your score.
Health coverage cuts may make things worse
This court ruling comes as the future of healthcare coverage is also in flux.
A major federal law passed under President Trump is set to cut about $1 trillion from Medicaid and Affordable Care Act (ACA) insurance plans over the next decade, according to the nonpartisan Congressional Budget Office.
That could leave 11.8 million people without coverage. If pandemic-era tax credits for ACA plans aren’t renewed, another 5 million could lose affordable insurance.
For older adults, these shifts could mean more out-of-pocket costs and—ultimately—more medical debt.
Also read: The hidden debt crisis: see where Americans are struggling the most
Tips to protect your credit from medical debt
Even with the court’s decision, there are still steps you can take to safeguard your credit:
- Check your credit report
You’re entitled to a free report from each credit bureau once a year at AnnualCreditReport.com. Watch for errors or debts you’ve already paid. - Dispute inaccuracies immediately
If something looks wrong, notify both the credit bureau and the provider. Include documentation like payment receipts or insurance statements. - Negotiate your bills
Don’t hesitate to ask about financial assistance or senior discounts. Many hospitals and clinics offer flexible options if you speak up. - Set up a payment plan
Keeping a bill out of collections helps protect your credit. Most providers are willing to work with you before it reaches that point. - Ask for help if you’re overwhelmed
Nonprofit credit counselors and patient advocacy groups can walk you through confusing bills or appeal processes.
This ruling is a reminder that medical debt remains a financial risk, even when it’s not your fault.
But staying informed—and acting quickly when issues arise—can go a long way toward protecting your credit.
Read next: This simple trick could save you thousands on your hospital bill—here’s how
Have you dealt with medical debt affecting your credit? Found a billing error or successfully fought one? Share your experience with The GrayVine community in the comments—we’d love to hear what worked for you.
