WASHINGTON – The Trump Administration’s Consumer Financial Protection Bureau (CFPB) issued guidance this week claiming to prohibit states from removing medical debt from people’s credit reports, claiming that the Fair Credit Reporting Act (FCRA) overrides or “preempts” state protections that prevent the high cost of being sick from ruining people’s credit scores. Fifteen states ban medical debt from credit reports, including California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New York, New Jersey, Oregon, Rhode Island, Vermont, Virginia, and Washington State.
The guidance comes as millions face 100 to 300 percent increases in medical insurance premiums due to the expiration of Affordable Care Act tax credits. The issue is central in the government shutdown as some members of Congress attempt to restore those credits.
“It’s bad enough that millions of Americans may be priced out of health insurance coverage and end up burdened with medical debt. By trying to invalidate state laws protecting patients, Trump’s CFPB is doubling down on the harm, seeking to allow this medical debt to ruin people’s financial report cards and make it harder for them to get credit, rental housing, and jobs,” said Chi Chi Wu, director of consumer reporting and data advocacy at the National Consumer Law Center.
Wu noted that the CFPB’s interpretive rule is not legally binding, but at most would have persuasive value to courts. Under the Biden Administration, in 2022, the CFPB took the opposite stance about whether states could ban medical debt from appearing on credit reports. “The 180 degree about-face is one reason that the new interpretive rule should not have persuasive value,” said Wu.
Wu also pointed out how the new interpretive rule is internally contradictory, noting, “The new CFPB guidance criticized the Biden-era 2022 interpretive rule by stating that it ‘was unnecessary for the Bureau in 2022 to opine on the scope of preemption under the FCRA.’ Then the Trump-era CFPB proceeds to spend the rest of the guidance opining on the scope of preemption under the FCRA, the very thing it criticizes.”
Even if the Trump CFPB were to prevail on its new view that state laws are preempted, there are still options for states seeking to protect residents from the crippling effects of medical debt. “States can pass laws prohibiting creditors, landlords and employers from taking medical debt on credit reports into consideration when making decisions,” said Wu. “States can also require healthcare providers to include clauses in their contracts with debt collectors that prohibit the collectors from reporting the debts to a credit bureau.”
Related Resources
- Issue Brief: What States Can Do to Prevent Medical Debt from Ruining Credit Reports, Aug. 18, 2025
- Issue Brief: What States Can Do to Regulate Tenant Screening, May 29, 2025
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