Bill to prohibit the use of medical debt in credit reporting awaits Governor’s signature to become law

SACRAMENTO, Calif. – A bill authored by State Senator Monique Limón that stops medical debt from impacting a person's credit score is now only awaiting the Governor's signature to become law.

SB 1061 would take effect on Jan. 1 of 2025, making California the eight state to pass laws prohibiting medical-based debt from appearing on credit reports.

"When someone is scared and in pain, the last thing they should think about is whether seeking care will take away their ability to buy a house or land a job. Unfortunately, this is the experience of far too many Californians," said California Attorney General Rob Bonta. "There is no need for medical debt to appear on credit reports. We know it is not a reliable indicator of financial risk and it continuously prevents consumers from essential economic opportunities. With SB 1061, California can put a stop to this unnecessary and outdated practice."

The Consumer Financial Protection Bureau (CFPB) is implementing a new rule to limit the use of medical debt in consumer credit reporting after internal research by the CFPB showed consumers are over-penalized for medical debt.

In April of 2023, the three major credit reporting agencies - Equifax, Experian, and TransUnion - announced they would not include medical debt under $500 in their credit reporting.

According to a press release from State Senator Limón's Office, SB 1061 would provide relief for Californians faster than the federal actions intended to blunt the impact of medical debt of any size on credit reports nationwide.

"Medical debt is a pervasive issue across the United States. For people with significant medical needs, medical debt can build up over time causing patients distress and worsening their health," explained Senator Monique Limón. "It is time that California protects consumers from the disastrous effects of medical debt and signs SB 1061 into law."

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