Debt Is Debt: Why Trump Wants Medical Debt Back on Credit Reports

The Trump administration is moving to override state laws that protect consumers’ credit reports from medical debt.

Under the Biden administration, more than a dozen states, including California, New York, and Colorado, had passed laws to keep medical debt off credit reports, arguing that such debt can make it harder for people to buy a home, get a car, or find a job. The Trump administration contends that federal law should supersede these state-level protections.

The Consumer Financial Protection Bureau (CFPB) issued an interpretative rule stating that the federal Fair Credit Reporting Act (FCRA) takes precedence over any state regulations governing how debts are reported to credit bureaus such as Experian, Equifax, and TransUnion. This move reverses Biden-era policies that allowed states like New York and Delaware to prohibit the inclusion of medical debt on credit reports.

The CFPB maintains that Congress intended to establish a uniform national standard for credit reporting. The agency, now primarily focused on repealing previous regulations, says state laws restricting the reporting of debt conflict with federal intent.

Medical debt remains widespread because of disputes with insurance companies but largely because of peoples inability to pay. The Kaiser Family Foundation estimates Americans owe about $220 billion in medical debt, with roughly one in six residents in poorer Republican-led states carrying such debt.

The three major credit bureaus already agreed in 2023 to stop reporting medical debts under $500, which eliminated about 70% of such listings, but some states had gone further by banning medical debt reporting entirely. Critics warn that overturning these laws could hurt borrowers’ credit scores and limit access to mortgages, auto loans, and credit cards.

A credit report is like a financial report card showing your history of borrowing and repaying money. It includes your payment history on credit cards, loans, and mortgages; how much debt you currently have; how long you’ve had credit accounts; and whether you’ve had any bankruptcies or foreclosures. Lenders, landlords, and even employers use credit reports to decide whether to trust you with a loan, apartment, or job. Your credit report affects your credit score, a number that reflects how reliable you are with money.

If putting medical debt back on credit reports hurts a borrower’s chances of getting a loan, then that’s exactly what should happen. A credit score measures your ability to repay future loans. If you’re already burdened with medical debt, that affects your ability to repay other loans, and banks and lenders have every right to know that. A credit report exists for one reason: to show whether you can afford to take on more debt.

Some people argue that medical debt should not appear on credit reports be