Washington State Bans Medical Debt from Credit Scores Starting July 2024

Washington state will prohibit medical debt from affecting consumer credit scores under Senate Bill 5480, signed into law to prevent collection agencies and health care providers from reporting medical debt to credit bureaus. This legislation aims to reduce credit rating impacts stemming from medical emergencies, facilitating better financial stability and access to essentials such as housing, transportation, and employment for consumers.

The law, effective July 27, addresses concerns over the high cost of healthcare and medical bills that often lead to debt despite insurance coverage and high deductibles. This state-level initiative aligns with previous federal efforts to mitigate the credit consequences of medical debt, although some political divisions were evident in legislative support. The Consumer Financial Protection Bureau highlights that medical debt is a leading contributor to collection accounts and credit challenges, emphasizing the law's significance in enhancing financial protections for medical consumers in Washington.