Medical debt is a uniquely American problem. Unlike a missed mortgage payment or credit card bill, it often stems from unexpected illness or injury. For years, this debt has unfairly weighed down the credit reports of millions of consumers.

But the rules around how it shows up on credit reports are changing fast. Those changes can mean the difference between getting approved for a mortgage or car loan and being shut out of affordable credit.

As 2025 draws to a close, new regulations and political action are reshaping how lenders handle medical debt and report it to credit reporting agencies (CRAs). Here in this post, we will break down what’s changed, what these updates mean for consumers, and whether you can delete medical collections from your credit report in 2026.

The medical debt problem

Medical bills are one of the most common triggers of financial distress in the United States. According to a research paper published by the National Library of Medicine, roughly 36% of U.S. households had some form of medical debt, and about 21% had past‑due medical bills in 2024.

Researchers revealed that this debt totals close to 200 billion dollars nationwide; several families told researchers that medical bills force them to cut back on essentials or delay further care.

A survey conducted by West Health-Gallup in March 2025 showed that approximately 31 million Americans borrowed an estimated total of $74 billion just to pay for healthcare for themselves or a household member. This borrowing often translates into high-interest credit card debt or other loans, which eventually lead to bad credit.

Data from a health tracking poll in May 2025 indicated that nearly half of U.S. adults find it difficult to afford healthcare costs. About one in four say they or a family member had problems paying for health care in the prior 12 months.

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When medical bills go unpaid and are sent to collections, they can land on a credit report, slash your credit score and increase the cost of borrowing for everything else. It’s a cruel punishment for seeking necessary care.

The Consumer Financial Protection Bureau (CFPB) found about $88 billion in medical bills on Americans’ credit reports, often arising from surprise billing, insurance disputes, or errors. These negative items can lower scores, make loans more expensive, and even affect housing and job opportunities.

How medical debt results in bad credit

Most doctors and hospitals do not report directly to Equifax, Experian, or TransUnion. Instead, unpaid bills are usually sold or assigned to collection agencies, which then report the collection account.

Historically, those collection tradelines could appear after six months and stay on a report for up to seven years, even if the original bill was the result of an insurance glitch or a disputed charge.

Over the last few years, lenders and regulators have recognized that medical collections behave differently from other types of debt.

The CFPB’s research shows that medical collections are poor predictors of whether someone will repay a credit card, auto loan, or mortgage.

People who default on a medical bill are often perfectly capable of paying other debts, but they were simply overwhelmed by an unexpected medical crisis.

That insight helped drive a wave of reforms that continued into 2025.

Medical debt reporting: Key changes before 2025

The history of changes to medical debt reporting is a story of slow, incremental progress followed by major regulatory and legal battles.

The fight to remove medical debt from credit reports gained serious momentum in 2022 when the three national credit bureaus announced three voluntary policy changes:

• Paid debt removed: Paid medical debt collections were removed from credit reports.

• One-year buffer: Medical collections debt could not be reported until it had been in collections for one full year (365 days).

• Small debt excluded: Medical collections under $500 were excluded from credit reports altogether.

These industry-wide policy changes resulted in removal of an estimated 70% of outstanding medical debt from reports within a year.

According to the CFPB, the share of Americans with unpaid medical bills on their credit reports fell from 14% in March 2022 to about 5% by June 2023.

Millions of Americans were still struggling to remove medical collections from their credit reports. They could still see large, disputed, or insurance‑related medical debts reflected in their scores.

2025: Big federal rule followed by big pushback

In early January 2025, the federal government took a more aggressive step to help millions of Americans get rid of medical collection marks on their credit reports.

The CFPB finalized a rule that would have effectively banned credit reporting agencies from including all medical debt on credit reports provided to lenders. It also would have prohibited lenders from using medical information in their lending decisions.

This was a monumental shift, estimated to remove $49 billion in medical bills from the credit reports of about 15 million Americans. It could help increase credit scores of millions of consumers by an average of about 20 points.

The CFPB argued that medical bills are often inaccurate, heavily influenced by insurance complexities, and not very useful for predicting credit risk.

Major scoring companies such as FICO and VantageScore had already reduced how much medical collections weigh on scores; the new rule was framed as the next logical step to align credit reporting with actual risk.

For consumers with legitimate but overwhelming medical bills, the change promised a cleaner path to rebuilding credit, even if they still owed the money.

But, the federal rule did not settle the issue.

A group of trade associations, including those representing credit unions and the credit reporting industry, quickly filed lawsuits to challenge the CFPB’s authority to restrict medical debt reporting.

After initial legal back-and-forth, a U.S. District Court in Texas ultimately vacated the rule in July 2025.

The court essentially agreed with the plaintiffs that the CFPB's total ban conflicted with the existing federal Fair Credit Reporting Act (FCRA).

This reversal means the groundbreaking federal protection is not in effect.

The balance of power between federal and state protections also shifted in 2025. A separate regulatory move asserted that federal credit reporting law preempts many state‑level bans or limits on reporting medical debt, potentially weakening protections in states that had passed their own medical debt reporting restrictions.

The net result so far is a patchwork environment where the major bureaus’ voluntary policies still offer some protection under 500 dollars, but larger medical collections can continue to appear on many reports and drag scores down.

Where things stand as we step into 2026

Heading into 2026, consumers see a mixed picture. With a whirlwind of activity that took place in 2025, medical debt reporting has returned to the status quo established by the 2022 voluntary changes:

• Paid medical collections are removed.

• Medical collections must be at least one year old to be reported.

• Medical collections under $500 are not reported or considered by popular scoring models to calculate your credit scores.

For the estimated 15 million Americans with medical debts over $500 and older than a year, that debt can still potentially hurt your credit score.

Yet the conversation has shifted.

Research from the Urban Institute and the CFPB shows that removing medical collections can modestly improve credit scores and expand access to affordable mortgages for tens of thousands of borrowers each year.

That evidence is driving ongoing policy debates, state‑level experiments, and lender‑side adjustments that may continue beyond 2025, even without a single nationwide rule.

The rise of state-level protections

The federal reversal has essentially shifted the battleground to the states.

Several states have taken the lead in enacting their own stronger protections, regardless of the federal rule's status.

More than 15 states, including California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington have passed laws that either prohibit medical debt from being included on consumer credit reports entirely or significantly limit its reporting.

However, as discussed above, the CFPB in October 2025 issued new guidance suggesting that the FCRA overrides state-level policies on credit reporting, including those regarding medical debt.

This is a complex legal issue, and it remains to be seen how the courts will ultimately resolve this conflict between federal and state authority.

For now, if you live in a state with its own law, you may have extra protection, but be aware of the uncertainty.

If you want to explore this route to delete medical collections from your credit report, it's a good idea to consult a legitimate credit repair company.

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Looking ahead to 2026: How to remove medical bills from credit reports

Given the ongoing legal turbulence, consumers must be proactive and vigilant. Tackling medical debt now requires a more strategic approach.

1. Master the dispute process

Medical debts are notoriously prone to errors. Therefore, disputes will be your primary tool in 2026.

Some medical bills will never appear because they are under bureau thresholds, while others may show up only with certain bureaus or in certain scoring models.

Checking all three reports for medical collections and monitoring score changes over time is advisable.

Also, be sure to validate the medical debt you see on your credit report.

Under the Fair Debt Collection Practices Act (FDCPA), you have the right to request validation of a debt within 30 days of initial contact.

You or a credit repair specialist can send a debt validation letter via certified mail to the collections agency. You can demand proof that the debt is yours, the amount is correct, and they have the legal right to collect.

Billing errors and insurance disputes are common in health care; so, make it a habit to keep detailed records: itemized bills, explanation‑of‑benefits statements, appeal letters, settlement agreements, and any charity care or financial assistance approvals.

If the collection agency cannot validate the debt, or if you find any error (incorrect amount, wrong date, or failure to observe the one-year waiting period), you or a credit restoration service provider you hire, can dispute it directly with the credit bureaus.

They are legally required to investigate under the FCRA.

2. Leverage state laws (If applicable)

If you live in a state that has passed its own medical debt reporting ban, learn the specifics of that law or consult a credit repair specialist.

If a collections agency is reporting debt in violation of your state law, you can cite that statute in your disputes and complaints to your state Attorney General.

3. Utilize the “Pay for delete" strategy, if necessary

If the debt is valid and accurate, your best bet is to negotiate.

If you are financially able to pay or settle the debt, try to negotiate a "pay for Delete" agreement with the collection agency.

This is an agreement where you pay the debt in exchange for the collector agreeing to remove the account from your credit report entirely.

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How a legitimate credit restoration service can help tackle medical debt in 2026

The dispute process for medical debt follows the same basic legal framework as other credit items, but the facts are often more complex.

In this situation, a professional credit restoration service offers several key advantages.

• Expert knowledge: A credit repair specialist understands the nuances of the FCRA and the FDCPA. They are trained to spot subtle violations by collection agencies, such as improper disclosure of medical information (a HIPAA violation that can be used for leverage) or failure to correctly verify the debt.

• Systematic handling of disputes: Professional credit restoration services efficiently handle the volume of disputes across all three bureaus simultaneously. They know how to craft dispute letters and have built-in systems for managing credit disputes that maximize the chance of removal by citing specific legal obligations and potential non-compliance from the reporter.

• State vs. federal law: With the conflict between the CFPB and state laws, a credit specialist can accurately determine which set of rules applies to your specific debt and location; they can ensure your dispute cites the strongest possible legal argument.

• Time and persistence: Specialists handle the required follow-ups, re-disputes, and communications with the bureaus and creditors; they can save you dozens of hours of frustrating administrative work.

Medical debt reporting: Preparing for policy shifts in 2026

Federal rules have been challenged and state laws are in flux. The landscape may change again in 2026.

Some policymakers are likely to continue pressing for limits on using medical information in credit decisions, while industry groups emphasize lenders’ need to see large, unpaid medical obligations.

You can expect potential new proposals, court decisions, or state‑level reforms that could either expand or narrow reporting of medical bills.

In this situation, the safest strategy is to treat medical debt as both a health‑care problem and a credit problem. That means negotiating with providers or hospitals early, asking about income‑based discounts and charity care, and avoiding unnecessary medical credit cards or high‑interest financing when possible.

It also means monitoring credit files, disputing errors promptly, and understanding that even as some protections grow, large medical collections can still drag scores down if they remain unpaid and reported.