The Trump administration has moved to repeal state laws protecting credit reports from medical debt.

trump The administration is going to reject any state laws that could protect consumers’ credit reports from medical debt and other credit issues.

Consumer Financial Protection Bureau What is known as an interpretive rule related to the Fair Credit Reporting Act has been drafted, interpreting the law in a way that should preempt the FCRA from any state laws or regulations when it comes to how debts must be reported to credit bureaus like Experian, Equifax, and Trans Union.

It repeals previous Biden-era rules and regulations that allowed states to impose their own credit reporting restrictions. More than a dozen states like new york And delaware Prohibit the reporting of medical debt on consumers’ credit reports.

Medical debt is often the most disputed part of a consumer’s credit report, as insurance payments can take time, and many times patients do not have the means to pay the medical bill in full if insurance is not covering the procedure that has already been performed.

The three credit bureaus jointly announced in 2023 that they would no longer track any medical debt of less than $500, at which time the bureaus said that 70% of all medical debt reported on consumers’ credit files would be eliminated. But some states have gone even further than this. New York, Delaware and others passed laws where medical debts can no longer be reported to credit bureaus.

The CFPB, which is largely inactive at this time with the exception of actively repealing previous rules written under President biden Or earlier, its rule states that Congress intended to “create a national standard for the credit reporting system” under the FCRA and that state laws follow that intent.

The Kaiser Family Foundation estimates that Americans owe approximately $220 billion in medical debt. In Republican-controlled states like South Dakota, Mississippi, West Virginia and Georgia, nearly one in six Americans owe medical debt, according to KFF.

Having outstanding, unpaid medical debt can affect a person’s ability to apply for a mortgage, credit card or auto loan.

A spokesman for the bureau did not immediately respond to a request for comment.