Washington DC - President Donald Trump and his administration are moving to do away with rules and regulations that protect consumers' credit reports from medical debt and other issues.

According to AP News, the Consumer Financial Protection Bureau recently drafted a reinterpretation of a rule in the Fair Credit Reporting Act to preempt any state laws or regulations related to how credit bureaus should report individual consumer debt.

The draft is not yet legally binding and will likely be contested in court.

The move seeks to override regulations implemented by Trump's predecessor, former President Joe Biden, that authorized individual states to implement their own credit reporting bans.

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To date, 15 states – including California, Colorado, and New York – have passed laws limiting medical debt reporting.

In 2023, the country's three credit bureaus – Experian, Equifax, and Trans Union – jointly announced they would no longer report medical debts below $500.

Medical debt is the most contested form of debt, as it regularly leads to financial insecurity for many Americans. An analysis from the research group KFF found that Americans collectively owed an estimated $220 billion in medical debt in 2024.

The repeal comes as the federal government remains shut down after Democrats and Republicans failed to agree on GOP-backed spending bill.

Maryland Senator Chris Van Hollen said in an X post the repeal will "crush" the credit of millions of Americans, arguing that the move is straight from the "billionaire playbook."