Roughly 15 million Americans still carry medical bills on their credit reports, according to the Consumer Financial Protection Bureau, even after the three major credit bureaus voluntarily removed billions of dollars in medical collections over the past two years. That federal figure now collides with a patchwork of state laws that have moved faster than Washington to ban medical debt from credit files, creating sharply different protections depending on where a patient lives.
State bans outpace federal rulemaking on medical debt
The CFPB proposed a rule to ban medical bills from credit reports nationwide, but that regulation has not yet taken effect. In the gap, at least three large states enacted their own prohibitions. New York signed the Fair Medical Debt Reporting Act into law as Chapter 727, and the state attorney general’s office now states that consumer reporting agencies cannot place or maintain medical debt on credit reports regardless of when the debt was incurred. Colorado passed HB23-1126, which restricts the inclusion of medical debt in consumer reports and limits related collector conduct. California’s SB-1061, with an effective date of January 1, 2025 according to Attorney General Rob Bonta’s office, makes it illegal for medical debt to appear on credit reports in the state.
The practical result is that a patient in New York or California already has statutory protection that someone in, say, Texas or Florida does not. States that moved first should see faster declines in the number of residents carrying medical debt on their credit files, a pattern that quarterly credit-bureau data could confirm well before any federal rule kicks in. The CFPB itself issued an interpretive rule clarifying that the Fair Credit Reporting Act’s preemption of state law is narrow, meaning state-level bans like these are generally not preempted by federal statute. That legal reading gave states a green light to act independently.
Competing counts show progress and persistent harm
Two sets of numbers frame the scale of the problem, and they do not fully agree. The CFPB reported that roughly 15 million Americans still have medical bills on their credit reports, even after the voluntary bureau changes. The agency also noted that the share of Americans with unpaid medical bills on reports has been falling as older items age off and new ones are less likely to be furnished.
Separately, the Urban Institute estimated that more than 15 million consumers may have had all medical debt in collections removed from their credit files over the course of a year following the bureau-level policy shifts. Yet the same research group found that nearly 10 million consumers still had medical debt in collections on their credit reports as of August 2024. The gap between the 15 million people flagged by the CFPB and the nearly 10 million with remaining collections in the Urban Institute’s analysis reflects different data sources and definitions: one focuses on any medical bill on file, while the other zeroes in on debts that have already gone to collections.
Both sets of numbers point in the same direction. Voluntary changes by the credit bureaus and early state bans have already reduced the footprint of medical collections in the credit system, but millions of people still see their access to loans, apartments, and sometimes jobs constrained by bills that often arise from emergencies rather than discretionary spending. For consumers in states without explicit bans, the impact of a single hospital visit can linger for years in the form of higher interest rates or outright denials of credit.
Federal rule aims to standardize protections
The CFPB is now working on a national standard that would narrow those disparities. As part of its rulemaking agenda, the agency has outlined a proposed prohibition on medical information in credit decisions, building on its earlier proposal to keep medical bills off credit reports. Together, these efforts are intended to ensure that creditors and consumer reporting agencies cannot use medical debts or related information when evaluating borrowers.
If finalized in line with the proposal, a federal rule would effectively extend the kind of protections already adopted in New York, Colorado, and California to consumers in every state. It would also reduce the incentive for medical providers and collection agencies to use credit reporting as a leverage tool in billing disputes, since furnishing the debt would no longer affect a patient’s score. For lenders, the CFPB has argued that excluding medical bills should improve the accuracy of underwriting, because such debts are often poor predictors of a borrower’s willingness or ability to repay non-medical obligations.
Until that happens, however, the geography of medical debt remains a decisive factor. A patient treated in Denver or Brooklyn can expect that an unpaid emergency-room bill will not show up in a future mortgage application, while a similar patient in Houston may still find their credit score dragged down by a collection notice. The emerging state-federal split means that the harm from medical billing practices is slowly shrinking-but it is shrinking unevenly, and for millions of Americans, not nearly fast enough.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
