Will medical debt hurt your credit score?

A hospital trip or other expensive, unexpected medical emergency is already stressful enough without worrying about what medical debt could do to your credit score.

Thankfully, under a recent rule made by the watchdog Consumer Financial Protection Bureau (CFPB), medical debt will not be shared on credit reports sent to lenders starting later this year. This would prevent unavoidable medical bills from ruining an otherwise strong credit score.

However, that rule is not currently in effect after a federal judge in Texas granted a 90-day “stay” in a lawsuit against the CFPB rule. The suit was brought by the Cornerstone Credit Union League. This decision effectively prevents the rule from going into effect until June 15, 2025. The court will resume consideration of the case in mid-May.

But Congress is thinking about repealing this rule before it can go into effect to protect patients.

People shouldn’t be penalized for medical debt 

Medical debt should be treated differently on credit reports than debt incurred from overspending such as taking out a loan for a car you can’t afford, or buying a house above your budget. Medical bills are mostly unavoidable, and unlike consumer products, health care prices are almost impossible to know in advance.

What’s more, medical debt isn’t a good predictor of a person’s ability to repay their loans. Instead, medical debt harms people by artificially lowering their credit score, making it harder to buy a house or a car.

And medical debt has often not been fairly charged.  The CFPB has found cases of debt collectors who “continue to collect on and report to the credit bureaus medical bills even after the consumer has shown that they do not owe the amount.”

Congress shouldn’t block important consumer protections 

If Congress allows medical bills to continue to impact credit scores, the result could be devastating to the 15 million Americans who owe $49 billion in medical debt.

The CFPB’s move will not erase medical debt — patients will still have to pay their legitimately owed medical bills, and landlords and employers will still be able to see the debt. But under this rule, people with outstanding medical bills won’t have to suffer the consequences of a low credit score.

Most Americans can understand how it feels to have an unexpected medical emergency. It happens to everyone, regardless of their political views, income or background. These emergencies are unavoidable, which is why it just isn’t fair to penalize people for them.