An attorney specializing in consumer protection is sounding the alarm as the Trump administration prepares to enact a new policy that could tank credit ratings for millions of Americans.

A total of 15 states currently have laws that limit medical debt from impacting individuals' credit scores, laws that were enacted under the Biden administration, which in early 2025 issued a new rule that would have removed all medical debt from credit reports, eliminating an estimated $49 billion in unpaid medical bills from credit reports.

However, the Trump administration is set to issue guidance Tuesday that would roll back the Biden administration’s efforts by prohibiting states from withholding individuals’ medical debt from credit reporting, The Lever reported Monday, a move that could “harm” millions of Americans, according to Chi Chi Wu, an attorney with the National Consumer Law Center.

“[The Trump administration’s new guidance is] trying to invalidate [state] protections that don’t cost anything to anyone,” Wu said, speaking with The Lever. “It’s not just taking a hands-off approach and saying, ‘we won’t protect consumers,’ it’s saying, ‘we are going to actively harm you.’”

About 100 million Americans hold around $220 billion in medical debt, and those unpaid bills impacts the credit reports of about 15 million, despite more than 90 percent of Americans having health insurance. Given the impact of having a low credit score – which can limit access to loans, housing, vehicles and employment – support has grown for eliminating medical debt from credit reports, with 90 percent of Americans supporting the idea.

The United States is unique in its citizens having billions of dollars worth of medical debt given the nation is the only major Western nation without a form of universal health care coverage. Instead, the United States’ health care system is a patchwork of private, employer-based and public programs.

The United States spends more on health care per capita than any other nation on earth, and despite ranking near the bottom in health outcomes when compared with other major Western nations; life expectancy is significantly lower than comparable nations, and other health metrics like infant and maternal mortality are also far worse.

“Whether [the federal guidance is] successful or not is going to be up to the court,” Wu said. “This is not a legally binding opinion. I would hope that courts aren’t persuaded by it.”