Struck down by a federal court last year, a rule that would have erased most medical debt from consumer credit reports nationwide is gone, leaving the question of whether a hospital bill can drag down a credit score to a patchwork of state laws rather than one national standard. Fifteen states have passed their own restrictions on reporting medical debt, and all of them remain in force today, but a court’s passing comment about whether those laws can survive a legal challenge has introduced real uncertainty about how long that protection lasts.
Why the federal rule no longer applies
The Consumer Financial Protection Bureau finalized a rule in January 2025 barring consumer reporting agencies from including medical debt on credit reports supplied to creditors and barring creditors from considering it in lending decisions. A federal judge in the Eastern District of Texas vacated that rule in its entirety on July 11, 2025, ruling in Cornerstone Credit Union League v. Consumer Financial Protection Bureau that the CFPB exceeded its statutory authority under the Fair Credit Reporting Act because the statute’s text already permits reporting properly coded medical debt, according to the National Consumer Law Center’s detailed account of the litigation. \u201cThe rule exceeded the Bureau’s statutory authority because FCRA explicitly allows Credit Reporting Agencies to report, and creditors to obtain and use, information about medical debt that is properly coded to obscure the name of the provider and the nature of the services provided,\u201d Consumer Data Industry Association president and CEO Dan Smith said in a statement welcoming the ruling; the CDIA represents the nationwide credit bureaus. The ruling applies nationwide and blocks the CFPB from adopting a similar rule again, though consumer advocates who intervened in the case continue to argue medical debt is a poor predictor of whether someone will repay a loan.
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The fifteen states that still limit medical debt on credit reports
Separate from the federal rule, fifteen states have enacted their own statutes restricting medical debt on credit reports since 2023, according to NCLC’s compiled list: California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington. New York’s law, effective since February 2023, was among the first; Oregon’s, which bars both furnishing and reporting of medical debt, only took effect this past January 1. The laws differ in what they cover: some, like Colorado’s and New York’s, bar credit bureaus from including medical debt at all; others, like Connecticut’s and Virginia’s, bar hospitals and debt collectors from reporting it to a bureau in the first place; and a few, including California’s and Maryland’s, reach further to bar lenders from using medical debt in a credit decision even if it somehow appears on a report. Maryland’s two 2025 statutes, one barring hospitals from reporting medical debt and the other barring credit bureaus from including it, are among the state laws a Baltimore law firm’s client alert flagged as facing \u201csignificant legal risk\u201d from the Texas ruling, even though that decision does not bind Maryland courts. As of today, every one of the fifteen state laws remains in effect.
A legal cloud, but not a court order, hangs over those state laws
The Texas court’s opinion included a line suggesting that federal law preempts state statutes barring credit bureaus from reporting coded medical debt. But NCLC’s analysis is emphatic that the comment is dicta: the preemption question was never briefed or argued in the case, the court’s actual final judgment struck down only the CFPB’s rule and made no order regarding any state law, and the opinion did not cite or address prior appellate rulings, including a 2022 First Circuit decision that upheld a similar state law against the same preemption argument. Separate from the legal fight, the three nationwide credit bureaus already voluntarily stopped including medical debt under $500, debt less than a year delinquent, and any paid medical debt on reports beginning in 2022 and 2023, changes that remain in place regardless of how the state-law preemption question is eventually resolved. In 2025 the bureaus also began voluntarily offering free credit reports once a week rather than the once-a-year minimum required by federal law, giving consumers more chances to check whether a barred medical debt has slipped onto a report by mistake; NCLC’s guidance recommends ordering that free report through the central site, AnnualCreditReport.com, rather than by opening an account directly with an individual bureau, since some of those accounts carry mandatory arbitration terms a consumer might not want to accept. The Consumer Financial Protection Bureau itself has not proposed a replacement rule since the vacatur, and the ruling forecloses that option going forward, leaving federal policy on medical-debt credit reporting effectively frozen at the pre-2025 status quo unless Congress passes new legislation or a state law is separately upheld in court. Until a court with jurisdiction over a specific state statute rules otherwise, NCLC concludes, the fifteen state laws stand exactly as written.
What still shows up on a credit report after a hospital stay
Whether a specific medical bill can still reach a credit file now depends on which state a person lives in, which category of law that state passed, and whether that law survives a future court challenge. None of that changes what a collector can still do in the meantime: call, send notices, and refer an unpaid account to collections while the credit-reporting question gets sorted out elsewhere.
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This article was researched and drafted with the help of AI and reviewed by The Financial Wire editorial team before publication.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
