A lot of people read that their state banned medical debt from credit reports and figure the bill is gone from their file. The FCRA is the federal law that decides whether a state gets to do that, and the CFPB now says it does not.
That leaves a borrower with a medical collection and a state law that can’t be counted on. What holds up is the right the FCRA itself gives you: the right to dispute an item.
The FCRA Overrides State Laws on What a Credit Report Can Contain
Federal law wins when a state tries to control what goes on a credit report. Section 625(b)(1)(E) of the FCRA blocks state law on the subject of Section 605, which sets what a consumer report can contain, with one carve-out: any state law already in effect on September 30, 1996 stays standing. The enactment date decides it.
New York shows how that carve-out works. Its Section 380-j(f) bars reporting a paid collection more than five years old and a satisfied judgment five years after entry, both shorter than the federal seven years, and it survives because it predates 1996. A medical debt ban passed after that date gets no cover from the clause.
Whether a state’s ban qualifies turns on one fact, the year it became law.
The CFPB Says Federal Law Overrides State Medical Debt Bans
On October 20, 2025, the CFPB issued an interpretive rule stating that the FCRA preempts state bans on reporting medical debt (CFPB, 2025). It came a little over three months after a federal court in the Eastern District of Texas threw out the CFPB’s own national ban.
That national ban was a January 2025 rule under Regulation V. The CFPB estimated it would remove about $49 billion in medical debt from the credit reports of about 15 million Americans (CFPB, 2025). The court vacated it on July 11, 2025, and medical debt generally stays reportable today.
An interpretive rule is the agency’s reading of a law. It is not a new statute. The text it rests on is the carve-out above, so for a state ban enacted after 1996, the CFPB’s current position is that the federal standard governs. The 1996 date is the one exception the clause names.
How Many People Still Have Medical Debt on Their Credit Reports?
As of August 2024, 4.1% of consumers, about 9.7 million people, had medical debt in collections on their credit records, with a median of $1,465 owed (Urban Institute, 2025). Two years earlier the share was about 14% of adults with a credit report, and it fell to 5% by August 2023 after the bureaus’ removals (Urban Institute, 2023).
Even after those removals, medical debt in collections sits on millions of files. That is why the preemption question has real people behind it.
Bureau Rules Already Remove Paid and Under-$500 Medical Collections
Equifax, Experian and TransUnion announced in March 2022 that paid medical collections would leave consumer reports on July 1, 2022, and that unpaid ones would wait one year, up from six months, before appearing. On April 11, 2023, the same three bureaus announced they had removed medical collections with an initial balance under $500. They said that brought the total to nearly 70% of medical collection tradelines removed.
| Medical collection situation | What the bureaus do | Source |
|---|---|---|
| Paid medical collection | Removed from the report since July 1, 2022 | Bureaus’ joint release, March 18, 2022 |
| Initial balance under $500 | Removed from the report | Bureaus’ joint release, April 11, 2023 |
| Unpaid, any amount, under one year old | Not yet shown on the report | Bureaus’ joint release, March 18, 2022 |
| Unpaid, $500 or more, past one year | Reportable under the seven-year limit | FCRA Section 605 |
No statute sits behind the first three rows. They are bureau policy, and they hold for as long as the bureaus keep them.
The scoring models moved too. VantageScore stopped using medical collection data in VantageScore 3.0 and 4.0 at the end of January 2023, paid or unpaid, whatever the amount (VantageScore, 2022). FICO Score 9 disregards paid third-party collections, medical included, and treats unpaid medical collections less negatively (myFICO, 2026).
Our guide to what the 2023 bureau changes mean walks through each one. Does medical debt affect your credit score in 2026 covers the scoring side.
Match Your Medical Item to the Rule That Governs It
Three layers set the limits on a medical item. They are the federal FCRA, the bureaus’ own policies, and your state’s law. Which one governs your bill depends on its payment status, its starting balance and its age.
| Your situation | Rule that governs | Your move |
|---|---|---|
| Medical collection already paid | Bureau policy since July 1, 2022 | Pull credit reports and confirm the paid medical collection is removed. |
| Initial balance under $500 | Bureau policy announced April 11, 2023 | Pull all credit reports and confirm the balance is gone. |
| Unpaid, $500 or more, past one year | FCRA Section 605 seven-year limit | Check the date of first delinquency shown |
| Wrong amount, wrong person, or no proof of the debt | FCRA Section 611 dispute right | Dispute the specific error with each bureau |
| A state ban says the debt stays off | CFPB position: FCRA overrides bans enacted after 1996 | Dispute on federal grounds and skip the ban |
The seven-year limit counts from 180 days after the missed payment that started the delinquency, under Section 605(c)(1). The clock runs from that delinquency, never from the date a collector bought the account. A debt buyer that reports a fresher date is reporting it wrong.
The lawsuit clock is a separate one, and we compare the two here.
A Dispute Can Challenge Four Things on a Medical Item
Section 611(a)(5)(A) of the FCRA requires a bureau to delete or fix any disputed item it finds inaccurate or incomplete, or can’t verify. Section 605 adds a fourth ground, an item too old to report. Those are the four categories we flag on every item.
- Inaccurate. A wrong balance, a wrong date, or a bill that belongs to someone else.
- Incomplete. An entry that leaves out facts that change what it means.
- Unverifiable. An entry the furnisher can’t back up when the bureau asks.
- Too old to report. An item past the seven-year window, counted from the delinquency.
The CFPB gave the problem of wrong bills its own section, titled “Medical debt not owed,” in its FDCPA Annual Report. In CreditRefresh’s own analysis of the CFPB’s public Consumer Complaint Database, 45.2% of debt-collection complaints about medical debt recorded in the twelve months to August 2026 said the collector was trying to collect a debt not owed. Those are consumer allegations the CFPB does not verify.
A dispute can’t remove a bill that is accurate, owed and inside the window, and the bureaus decide each outcome. Our dispute letter template shows what each letter needs.
Your Dispute Right Does Not Depend on Your State’s Ban
The right to dispute an error is the FCRA’s own, in force since 1970, so the fight over state bans doesn’t touch it. A bureau that gets your dispute must run a reasonable reinvestigation and delete or fix whatever it finds inaccurate, incomplete or unverifiable.
That is worth more than a ban you can’t count on. A dispute works on the item in front of you. Nobody can promise that item comes off, and this industry has been fined for promising it. On September 30, 2024, the CFPB took action against Commonwealth Equity Group, LLC, doing business as Key Credit Repair, and Nikitas Tsoukales, for $41.3 million. The action covered charging advance fees before achieving durable results and misrepresenting its ability to remove negative credit items.
Reviewers describe the same gap between promise and result. Of the 197 one- and two-star reviews in Credit Karma’s latest 200, 43 said a promised result did not happen. In Dispute Beast’s latest 200, 19 of the 33 one- and two-star reviews said they paid for months and nothing changed. Gi Daniel wrote in a 1-star Trustpilot review of Dispute Beast on September 13, 2026:
“used the services for about a year did absolutely nothing other than removing a credit inquiry litterally paid 12 months for service and also paid 12 different times for sprint mail all in all paid about $1000 for services that were unfortunately never delivered”
We can’t promise a medical item leaves your report, and neither can anyone else. A state ban is a promise you can’t count on. The dispute right is the part of the law that still works, one item at a time.
Skip the paperwork. Start your dispute.
CreditRefresh drafts your FCRA dispute letter and tracks the 30-day investigation window. You review, approve, and send. You stay in control.
Get StartedWhich Dispute Tool Reaches Every Bureau That Holds Your Medical Collection?
A medical collection can sit on three separate bureau files, so a tool that reaches one bureau leaves two untouched, and only Credit Karma in this set is limited to TransUnion.
| Tool | What you pay | What that buys on a medical item | Bureaus | Trustpilot |
|---|---|---|---|---|
| CreditRefresh | $49.99/mo, no setup fee, cancel anytime. Mail letters yourself free, or pay RushMail per letter | Drafts a letter for each item you pick; nothing is sent until you sign | Equifax, Experian, and TransUnion | 4.3 (9 reviews) |
| Dispute Beast | From $49.99/mo for required monitoring. Mail letters yourself free, or pay Sprint Mail per letter | AI dispute app that comes with paid monitoring; you print and mail, or pay per letter | Equifax, Experian, TransUnion | 4.2 (2,067 reviews) |
| DisputeBee | $49/mo personal, $129/mo business | Templates you print, mail and track yourself; no bundled monitoring | Equifax, Experian, TransUnion | 3.2 (68 reviews) |
| The Credit People | $99/mo standard, $119/mo premium, or $599 for 6 months | A team works the case for you; you don’t approve individual letters | Equifax, Experian, TransUnion | 1.7 (17 reviews) |
| Lexington Law | $139.95/mo, invoiced at the end of each service period | Attorney-backed firm disputes for you; letters aren’t shown to you | Equifax, Experian, and TransUnion | 3.2 (624 reviews) |
| Credit Karma | Free, paid for by lender referrals | Free monitoring and a form that disputes with TransUnion only; no letter drafted | TransUnion | 1.1 (912 reviews) |
Every price is that company’s own published rate, read off that company’s own site on September 15, 2026. Trustpilot scores and review counts as published on September 24, 2026.
How CreditRefresh Takes You From Three Bureau Reports to a Signed Letter in 3 Steps
A state ban you can’t count on leaves the federal dispute right, and that right is the part of this we built the product around. In CreditRefresh’s September 18, 2026 analysis of paying-member data, 2.3% of disputed bureau-level items in mailed rounds had a recorded outcome. Within that subset, 47.9% were no longer reported on a newer pull of the same bureau, while 52.1% remained reported with a changed balance, status or negative flag.
Here is how it works. We pull your reports from all three bureaus and flag items that look inaccurate, incomplete, unverifiable or too old to report. We draft a letter for each item you choose to challenge, and you review and sign before anything goes out. You mail the letters yourself or hand the round to RushMail, and we track each letter and the bureaus’ responses. It’s included with Refresh Monitoring at $49.99 a month, with no setup fee and no contract.
Frequently Asked Questions
What are the violations of the Fair Credit Reporting Act?
The common ones on a medical item are a furnisher reporting information it knows or has reason to believe is inaccurate (Section 623(a)(1)(A)), a bureau skipping a reasonable reinvestigation (Section 611), a deleted item reinserted without written notice within 5 business days (Section 611(a)(5)(B)), and a report pulled without a permissible purpose (Section 604). A willful violation carries actual damages or $100 to $1,000 per consumer, plus punitive damages and attorney’s fees (Section 616).
Do unpaid medical bills go away after 7 years?
The report entry ends, and the bill doesn’t. Section 605 caps reporting at seven years, counted from 180 days after the first missed payment. Most states set a lawsuit deadline of 3 to 6 years for debt (CFPB, 2026), and that clock runs separately from the reporting clock.
What happens if you don’t pay medical bills under $1,000?
A bill with an initial balance under $500 is off your reports under the bureaus’ April 2023 change. From $500 to $1,000 it can appear after the one-year wait. The collector can still try to collect, and a written dispute sent within 30 days of getting the validation notice stops collection until the debt is verified under FDCPA Section 809.
What is the new rule for medical collections on credit reports?
No federal rule bans medical debt from credit reports today. The CFPB’s January 2025 ban was vacated on July 11, 2025, and on October 20, 2025 the CFPB said the FCRA preempts state bans. The bureaus’ own rules on paid and under-$500 collections are what apply now.
How long do you have to sue over an FCRA violation?
Section 618 sets the deadline at the earlier of 2 years after you discover the violation or 5 years after it happens. A negligent violation carries actual damages plus costs and attorney’s fees under Section 617.
Does paying part of an old medical bill restart the clock?
The CFPB warns that a partial payment or acknowledging an old debt can restart the lawsuit clock, even after it has run out. The reporting clock doesn’t move, because Section 605(c)(1) counts from the first missed payment.
CreditRefresh drafts a dispute letter to all three bureaus for every medical item you choose to challenge, and nothing goes out until you review and sign it.
