Oregon lawmakers pass bill to keep medical debt off credit reports

A bill

aimed at preventing medical debt from impacting patients’ credit scores

won final approval in the Oregon Legislature Monday.

Senate Bill 605

, which the House passed with revisions last week, cleared the Senate on an 18-12 vote. The legislation would remove medical debt from credit reports and bar debt collectors, hospitals and clinics from reporting unpaid medical bills to credit agencies. It applies not only to debt owed directly to providers but also to credit cards issued solely for covering medical expenses.

The legislation covers a broad range of health-related costs, including provider fees, equipment, medication and services, while excluding purely elective cosmetic procedures. It now goes to Gov. Tina Kotek’s desk for her signature.

Backers say the bill offers needed protection for patients, arguing that medical debt is not something most people can plan or budget for, like student loans, mortgages and other types of debt.

Rep. Nathan Sosa, D-Hillsboro and one of the bill’s chief sponsors, argued that going into debt after being rushed to the hospital for an emergency is not the same as going into debt for a luxury vacation. He also said unpaid medical bills are often rife with inaccuracies because of mistakes in billing or disputes with insurers.

“Patients can get caught in the middle of fights over billing codes and pre-authorizations and the patient’s credit report winds up as collateral damage,” he said. “Oregonians who are recovering from a serious illness or injury already have enough to deal with… This bill ensures that their credit score is one less thing they’ll have to worry about.”

Medical debt is widespread in Oregon and across the country. According to a November survey by the

Oregon Values and Beliefs Center

, about 1 in 3 Oregonians reported carrying some type of medical debt within the last two years. A recent report by the Oregon Health Authority found that nearly 11% of Oregonians reported they were unable to pay medical bills in the past year.

The bill was supported in January by the federal Consumer Financial Protection Bureau, which finalized a rule to ban credit agencies from including medical debt on credit reports and prevent lenders from using medical information when evaluating borrowers.

The federal watchdog agency’s rule was set to take effect in March, but it faced legal challenges in federal court. Under new leadership appointed by President Donald Trump, the CFPB has since reversed its stance and is now siding with credit industry groups in a lawsuit aimed at overturning the rule.

SB 605 would codify into state law the CFPB’s earlier ruling, providing state-level protections to consumers around credit reporting.

Opponents of the bill include consumer credit reporting agencies and financial services companies. The Oregon Bankers Association, which represents banks across the state, argued that the bill doesn’t clarify that the restrictions apply only to credit cards used solely for medical expenses, which could force banks to access sensitive purchase details they typically do not receive, raising privacy and compliance concerns.

The Consumer Data Industry Association, which represents consumer reporting agencies, argued that the bill could increase risk to lenders and creditors. The organization also testified that the bill “could unintentionally limit the availability of credit by reducing the completeness of consumer reports.”

If signed into law, the bill will take effect Jan. 1, 2026, preventing major credit reporting agencies from including medical debt on Oregonians’ credit files and allowing consumers to take legal action if creditors violate the new rules.