Trump Administration Moves to Override State Laws Protecting Medical Debt from Credit Reports

The Trump administration, through the Consumer Financial Protection Bureau (CFPB), has initiated steps to reverse policies that aimed to remove medical debt from consumer credit reports, drawing sharp criticism from lawmakers. This move, highlighted by a recent interpretive rule issued in late October 2025, challenges state-level protections. Representative Ruben Gallego voiced strong opposition on social media, stating, "> You know what could have helped this? Taking medical debt off credit reports. But Trump made sure that didn’t happen. Right before he kicked millions off health care."

The new guidance marks a significant departure from the previous administration's efforts to shield consumers from medical debt. In January 2025, just before the Trump administration took office, the Biden administration finalized a rule to eliminate medical debt from credit reports. However, this federal rule was subsequently voided by a federal judge in July 2025 after industry groups filed lawsuits and the incoming Trump administration declined to defend the policy. Separately, the three major credit bureaus had voluntarily removed medical debts under $500 from credit reports in 2023, a policy that remains in effect.

The CFPB's latest interpretive rule asserts that the federal Fair Credit Reporting Act (FCRA) preempts state laws concerning credit reporting, including those that ban medical debt from credit reports. This reinterpretation directly challenges the legislative actions of over a dozen states, such as California, Colorado, and Washington, which have passed laws to shield consumers from the impact of medical debt on their credit scores. Consumer advocates warn that this could expose millions of Americans to financial hardship.

Critics argue that allowing medical debt on credit reports is unduly punitive, as such debt often arises unexpectedly and is not indicative of financial irresponsibility. With millions of Americans already facing rising healthcare premiums, the potential for medical debt to negatively impact credit scores could exacerbate financial insecurity. Senators Jeff Merkley and Raphael Warnock, among others, have also publicly pushed back against the administration's actions, advocating for stronger consumer protections against medical debt.

While the CFPB's interpretive rule does not immediately invalidate existing state laws, it is expected to invite legal challenges against them, creating uncertainty for consumer protections nationwide. Experts note that the guidance itself is not legally binding but serves as a strong signal of the administration's intent. The ongoing debate underscores the broader struggle between federal and state authority in consumer financial protection and the future of medical debt reporting.