Trump Administration Targets State Protections on Medical Debt

The Trump administration is advancing efforts to dismantle state laws that safeguard consumer credit reports against medical debts. The Consumer Financial Protection Bureau (CFPB) is reinterpreting the Fair Credit Reporting Act (FCRA) to assert federal authority over state regulations, specifically concerning how debts are reported to major credit agencies such as Experian, Equifax, and TransUnion.

This move reverses previous regulations enacted during the Biden administration, which permitted states to enforce their own credit reporting restrictions. States like New York and Delaware, which have barred the reporting of medical debt on credit accounts, are among those affected. Medical debt often represents a significant and contested portion of consumer credit reports due to delayed insurance payments or lack of coverage.

The CFPB stipulates that Congress’s intention was to establish national standards for credit reporting, thereby rendering state laws non-compliant. This reinterpretation occurs as the Kaiser Family Foundation reports that Americans owe approximately $220 billion in medical debt, with considerable impacts on credit accessibility for individuals in states like South Dakota and Mississippi.