A federal judge threw out the rule that would have pulled medical bills off American credit reports, and most coverage still has not caught up. If you have a medical collection sitting on your file, the protection you may have read about in January 2025 no longer exists.
Here is what actually applies now, and what it means if you are trying to get approved for a rewards card.
What the rule was, and what happened to it
The Consumer Financial Protection Bureau finalized a rule on January 7, 2025 that would have barred consumer reporting agencies from including medical debt on credit reports, and barred lenders from considering it. The agency estimated it would remove $49 billion in medical bills from the files of 15 million Americans, and said it expected roughly 22,000 additional mortgage approvals as a result.
On July 11, 2025, Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas vacated it. The case was brought by the Consumer Data Industry Association and the Cornerstone Credit Union League, and by the time it was decided the CFPB itself had joined the request to strike the rule down.
The court's reasoning was narrow and structural. The Fair Credit Reporting Act expressly permits credit reports to carry properly coded medical information, so a rule forbidding that exceeded what Congress authorized. Vacated means erased, not paused. There is no federal ban on medical debt appearing on your credit report.
What still protects you
The voluntary changes the three bureaus made in 2022 and 2023 were never part of the rule and are still in force:
- Paid medical collections are removed. Once you settle a medical collection, Equifax, Experian and TransUnion take it off, regardless of the amount.
- Unpaid medical collections under $500 are excluded. That threshold has applied since April 2023.
- There is a one-year grace period. A medical bill does not appear as a collection until it has been unpaid for a year, which gives insurance disputes time to resolve.
Those three together do most of the work for most people. The typical medical collection is small, and small unpaid ones and all paid ones are already invisible.
Scoring models add another layer. VantageScore 4.0 ignores unpaid medical collections under $500 outright, and ignores any collection once it is paid. Older models are less forgiving, and older models are still what many card issuers pull.
The part nobody is talking about
Fifteen states have passed their own bans on medical debt credit reporting, including California, Colorado, Illinois, Minnesota, New York and Washington. Those laws are the obvious fallback now that the federal rule is gone.
The Texas court cast doubt on them anyway. Its opinion said that any state law prohibiting a credit reporting agency from furnishing a report with coded medical information "would be inconsistent with FCRA and therefore preempted."
No state law was actually before the court, so that language did not strike anything down. But it is a published federal opinion pointing at every one of those statutes, and it tells you how the next challenge will be argued. Treat your state protection as real today and unsettled tomorrow.
What to do about it
Pull all three reports at AnnualCreditReport.com, which is free every week, and look specifically for medical collections. If one is there and you have paid it, the bureaus are supposed to remove it, so dispute it. If it is under $500 and unpaid, it should not be listed at all.
If the bill is genuinely yours and genuinely large, paying it does more than clear the balance. It removes the entry outright, which is not true of most other collection types.
For anyone planning a card application, this matters in a specific way: a medical collection can be the difference between an approval and a denial on a premium travel card, and it can drag the score that determines your starting credit line. If you are working toward a big welcome bonus, clearing a medical collection is one of the few credit repairs with an immediate, mechanical effect. Our guide to why credit scores drop covers the rest of what moves the number, and building credit from scratch is the place to start if the collection is part of a thinner file.
Some of the links in this article are affiliate links. We may receive a small commission at no extra cost to you if you apply through these links. This helps us keep the site running and continue creating free content.
