On January 7, 2025, the Consumer Financial Protection Bureau (“CFPB”) published a final Rule (the “Rule”) that prohibits consumer reporting agencies from including individuals’ medical debt on consumer credit reports.

The CFPB states that this Rule, which amends Regulation V of the Fair Credit Reporting Act, aims to ease financial burdens placed on individual consumers seeking loans by preventing medical debt from negatively impacting credit scores. Additionally, the Rule prohibits creditors from considering consumer medical debt information in credit eligibility determinations and decisions.

The Rule has been published in the Federal Register and is scheduled to become effective March 17, 2024. A recent Executive Order, however, may delay or impact whether the Rule is implemented and, if it is implemented, the timing of when the Rule becomes effective.

The Rule is currently facing at least two legal challenges. In ACA International, et al. v. Consumer Financial Protection Bureau, et al., which was filed in the U.S. District Court for the Southern District of Texas, and Cornerstone Credit Union League, et al. v. Consumer Financial Protection Bureau, et al., which was filed in the U.S. District Court for the Eastern District of Texas, plaintiffs allege that the CFPB has overstepped its rulemaking authority, which is the ultimate duty of Congress. In both actions, the plaintiffs also argue that the consequences of excluding medical debt in credit reporting could impede on the accuracy of credit reporting systems and make it more difficult to determine individuals’ creditworthiness. Additionally, the plaintiffs in ACA state that the Rule will ultimately harm the medical field by failing to hold individuals fully responsible for medical bills that support doctors, nurses, and hospitals. 

While lenders and individuals should continue to monitor this change, they should also be aware of states and other local jurisdictions that have already imposed restrictions on credit reporting as it relates to medical debt. For example, under New York’s Fair Medical Debt Reporting Act, hospitals, health care providers and ambulance services are prohibited from reporting, either directly or indirectly, medical debt information to consumer reporting agencies.