California Attorney General Rob Bonta has issued a consumer alert to remind residents, healthcare providers, and credit reporting agencies that state law prohibits medical debt from appearing on credit reports. This reminder comes after the Consumer Financial Protection Bureau (CFPB) under the Trump Administration released an interpretive rule suggesting that federal law preempts state medical debt laws. According to Bonta, this is not the case in California.
“In California, it is illegal for medical debt to appear on your credit report. Medical debt — which the law generally defines as debt owed to a provider of medical services, products, or devices — is generally unforeseen; it is not a reliable predictor of credit risk and can make it harder for people who are already struggling to secure housing, a job, or a car to get to work,” said Attorney General Bonta. “California banned medical debt from appearing on credit reports because we recognized this practice as harmful to struggling consumers and not helpful in determining creditworthiness. Let me be clear: This remains the law in California. I urge consumers to understand their rights and to regularly check their credit reports to ensure medical debt does not make an appearance. The California Department of Justice is committed to protecting and enforcing all of California’s laws — including this one.”
Senate Bill 1061 (SB 1061), sponsored by Attorney General Bonta and authored by Senator Monique Limón (D-Santa Barbara), took effect on January 1, 2025. The law aims to protect consumers from negative impacts on their credit caused by medical debt.
Across the United States, rising levels of medical debt continue to present obstacles for many individuals seeking employment or housing. Studies have shown that those with medical debt face greater challenges securing rentals or mortgages compared with people carrying student loans or credit card balances. Medical debt can also affect job prospects since some employers use credit reports during hiring processes.
To help prevent errors related to medical debt on their records, Californians are encouraged to check their credit reports regularly for inaccuracies or changes. Each consumer is entitled by law to one free annual report from each of the three national bureaus—Equifax, Experian, and TransUnion—which can be obtained at www.annualcreditreport.com/cra/index.jsp or by calling 1-877-322-8228.
If individuals find medical debt listed on their report, they should contact both the creditor and relevant agency immediately so that corrections can be made promptly. If problems persist after notification, consulting legal assistance may be necessary. Consumers may also file complaints with the California Department of Justice at oag.ca.gov/report.
