President Donald Trump returned to the White House this January with a flurry of sweeping orders – some of which may impact Americans’ credit scores.
Trump and his allies are set on enacting his “One Big Beautiful Bill,” which would add trillions to the country’s already sizable deficit and drive up interest rates, producing large-scale macroeconomic repercussions.
Financial markets have already warned of the rising debt, with Moody’s cutting its pristine “Aaa” U.S. credit rating, which could take even further hits if the deficit continues to rise.
To help pay for the bill, Republicans are looking to make cuts to Medicaid and food assistance programs, without which, more Americans are likely to go into medical debt.
Some 15 million Americans with medical debt may suffer even greater consequences of Trump’s policies after his administration paused a new Consumer Financial Protection Bureau rule that would ban the inclusion of medical debt on credit reports. As of now, medical debt can be included in credit scores and a significant amount of medical bills can drag down a credit score.
A lower credit score means a person appears to be a bigger risk to a lender, such as a bank. That could lead to higher interest rates on loans, such as for a car or a home.
A Biden-era rule would have removed $49 million in medical debt from credit score records, but new leadership at CFPB appointed by Trump is attempting to reverse its course, NPR reported.
In addition to the complete switch in its stance, the CFPB joined forces with plaintiffs who filed a lawsuit trying to stop the Biden ban.
The rule has since been stuck in limbo, with Judge Sean Jordan from Texas’ Eastern District federal court twice ordering a stay, delaying the rule’s new start date until the end of July. The outcome of the lawsuit will have tremendous financial implications for millions of Americans whose medical debt has negatively impacted their credit scores.
Meanwhile, consumer advocates have been speaking out on behalf of the medical debt rule, worried abandoning it would take away necessary consumer protections.
“I’m disappointed for the 15 million Americans who have medical bills on their credit reports and have to suffer the consequences of poor credit scores because of it,” Patricia Kelmar, senior director of health care campaigns at the U.S. PIRG Education Fund, told USA Today.
In the lawsuit filed in April, CFPB along with plaintiffs, the Consumer Data Industry Association and the Cornerstone Credit Union League, asked the judge to abandon the medical debt rule “because it exceeds the bureau’s statutory authority.”
“We believe that Congress is the only one who can act on this and determine whether or not it can be on the credit report,” Dan Smith, CEO and president of the Consumer Data Industry Association, told NPR.
“Our intention here is to protect the credit reporting system. To ensure that it is as complete and accurate as possible,” he said.
In the lawsuit, the groups also note that the three largest credit bureaus – Experian, TransUnion and Equifax – no longer list paid medical debts, unpaid medical debts less than a year old and medical debts less than $500.
Americans’ credit scores may also see some changes thanks to a proposal from Trump that would cap credit card interest rates at 10 percent – a significant reduction from the current average interest rate of about 21 percent. Lower rates mean people would be able to pay back credit card bills quicker, and improve their credit scores by having less debt.
The proposal was touted as a solution to the debt many Americans owe due to high credit card interest rates, Newsweek reported.
Americans held $1.21 trillion in credit card debt as of December 2024 – an increase of $45 billion from September 2024, per New York Fed data. Data also shows that 7.18 percent of U.S. credit card debt is in serious delinquency, likely causing many credit scores to take a serious downward spiral.
Following Trump’s campaign promise, Reps Alexandria Ocasio-Cortez (D-Ny) and Anna Paulina Luna (R-Fla) introduced legislation to cap credit card interest rates at a maximum of 10 percent.
The measure would take the financial burden away from consumers, especially those with high-interest debt.
The cap would last until January 1, 2031, according to the bill.
