The Trump administration is seeking to frustrate state efforts to protect consumers from having medical debts appear on their credit report.
This development follows a summer court ruling that canceled a previous Biden-era federal effort to remove medical debt from credit reports entirely.
The Consumer Financial Protection Bureau (CFPB), under acting head Russell T. Vought, published new guidance Tuesday stating that federal credit reporting law overrides state laws that “touch on broad areas of credit reporting”.
The CFPB has drafted a rule that would give the federal government sole authority over how debts are reported to major credit bureaus such as Equifax, Experian and TransUnion, The Associated Press reported.
The guidance specifically concluded that prior Biden-era guidance, which allowed states to regulate the use of information like medical debt in credit reports, was “wrong”.
Fifteen states have passed laws in recent years that restrict the inclusion of medical debt on credit reports. These reports, summarized by three-digit credit scores, act as crucial financial gatekeepers, determining a person’s ability to qualify for loans, interest rates, rent, or even a job.
While the new guidance is formally known as an interpretive rule and “does not have the force or effect of law,” experts suggest it may invite court challenges to existing state laws.
The three major credit bureaus (Equifax, Experian, and TransUnion) voluntarily removed medical debts under $500 from credit reports in 2023, and that policy currently remains in place. Typically, medical debt appears on credit reports only after providers send unpaid bills to collection agencies, which then report the delinquencies.
The Consumer Data Industry Association (CDIA), which represents credit bureaus, expressed support for the Administration’s action, stating there should be “one national standard” governing credit reporting information.
The industry argues that lenders need to know if borrowers owe significant amounts of money—regardless of how the debt was acquired—to make sound decisions about extending credit.
Consumer advocates, however, view the state laws as a necessary “backstop” for consumer protections, especially as the Trump administration has worked to “defang the watchdog consumer bureau”. Allison Sesso, president of Undue Medical Debt, told the New York Times that the guidance was disappointing but expects that states “should and will” fight any challenges to their laws. A recent survey conducted by her group found that three-quarters of voters want their state to pass laws protecting people from medical debt.
The move comes as many Americans face steeper costs for health coverage during the 2026 open enrollment period, potentially leading to increased medical debt. About 14 million people, or 6 percent of adults, owed more than $1,000 in medical debt in 2021.