Medical collections are showing up on credit reports again across most of the country, more than a year after a federal judge in Texas erased the rule meant to keep them off for good. The Consumer Financial Protection Bureau finalized that ban in January 2025, then reversed course under new leadership and joined industry plaintiffs seeking to vacate it. The result is a reporting map split by geography: fifteen states still bar medical debt from consumer files by statute, while an unpaid hospital or ambulance bill can again drag down a credit score used to price a mortgage or a car loan everywhere else.
A Rule the Bureau Itself Asked a Court to Kill
The Consumer Financial Protection Bureau finalized the medical debt rule on Jan. 7, 2025, in the final days of the Biden administration, estimating it would erase roughly $49 billion in unpaid medical bills from the credit files of about 15 million people. The Consumer Data Industry Association and the Cornerstone Credit Union League sued within days, arguing the rule rewrote the Fair Credit Reporting Act rather than interpreting it. When new leadership took over the bureau, it did not defend the rule it had just finished writing; it joined the industry plaintiffs and asked the court to vacate it.
U.S. District Judge Sean D. Jordan granted that request on July 11, 2025, in Cornerstone Credit Union League v. Consumer Financial Protection Bureau, ruling that the FCRA already lets creditors obtain and use coded medical-debt information in lending decisions, so a bureau rule blocking that same activity exceeded its statutory authority under the Administrative Procedure Act. The order vacated the rule outright rather than sending it back for revision, and the bureau’s own newsroom now labels its prior guidance on the rule “for reference only.”
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The Preemption Line One Judge Drew but Never Actually Ruled On
Buried inside Jordan’s opinion is a sentence that has done more to unsettle state regulators than the vacatur itself: that a state law “purporting to prohibit a consumer reporting agency from furnishing a credit report with coded medical information would be inconsistent with FCRA and therefore preempted.” A client alert circulated to lenders and credit unions treated that line as casting doubt on every one of the fifteen state statutes, and some industry counsel have advised furnishers to weigh reporting medical debt even in states that ban it.
Consumer attorneys read the same sentence very differently. The National Consumer Law Center notes that no state statute was ever before the Texas court, was never briefed by either side, and had no bearing on the only question Jordan actually had to decide: whether the bureau exceeded its own rulemaking authority. The preemption sentence is dicta, not a holding, and the opinion never cites a 2022 First Circuit decision that upheld a nearly identical state medical-debt reporting limit against the same FCRA preemption theory. Dicta from one federal district binds no other court.
Fifteen State Laws Keep a Ban Congress Never Passed
Outside the fight over the bureau’s authority, the three nationwide credit bureaus’ own 2022 policy changes are untouched by the ruling and apply in all fifty states: Equifax, Experian and TransUnion still exclude medical collections under $500 from every report, still remove a medical collection once it is paid in full, and still wait a year past delinquency before listing an unpaid medical bill at all. Those were voluntary industry commitments, not the vacated federal rule, so Jordan’s judgment has no legal reach over them.
The fifteen state statutes layered on top of that floor do not all work the same way. Colorado’s 2023 law and New York’s 2023 law bar consumer reporting agencies from including medical debt information at all, while Connecticut and New Jersey instead target the providers and debt collectors who furnish that information to the bureaus in the first place. Washington’s law took effect July 27, 2025, and Delaware’s followed on Oct. 27, 2025; Oregon’s does not take effect until Jan. 1, 2026, meaning three of the fifteen statutes only became operative after Jordan had already vacated the federal rule they were partly written to backstop.
Judge Jordan wrote that the bureau “was powerless to promulgate such a rule that flouts a federal statute by functionally rewriting it,” a line the credit reporting industry has quoted widely as vindication for its position that federal law, not agency preference, sets the floor for what belongs on a report. That reasoning applied specifically to the CFPB’s rulemaking power, not to a state legislature’s independent authority to regulate furnishers and reporting agencies operating within its borders, which is exactly the distinction the fifteen state laws are testing.
The practical effect for a household carrying a hospital bill in collections now depends heavily on which state issued the report subject’s driver’s license. In California, Colorado, Illinois, Maryland or New York, a furnisher that reports medical debt to a bureau risks violating state law regardless of what the FCRA permits federally. In Texas, Florida or the roughly three dozen states without such a statute, the same debt can appear on a report and factor into loan pricing as soon as it ages past the bureaus’ voluntary one-year and $500 thresholds.
Neither side has tested the preemption question in a court that actually has jurisdiction to decide it, and the sixty-day window for intervenors to appeal Jordan’s July 2025 judgment closed without further action. That leaves medical-debt reporting resting on a sentence no party asked the court to write, binding on no one until a lender, a bureau or a state attorney general forces the question in a case where preemption is actually at issue rather than assumed.
This article was researched and drafted with the assistance of artificial intelligence.
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