I'm Bond Peter Njoku (NMLS #2670329), and there's a genuine irony in Texas mortgage lending right now that most buyers don't know about: the federal rule that would have banned medical debt from credit reports nationwide was struck down by a federal court sitting in the Eastern District of Texas on July 11, 2025. That court ruled the CFPB exceeded its authority under the Fair Credit Reporting Act. As of 2026, that federal ban is not in effect anywhere in the country — and unlike roughly 15 other states that passed their own protective laws in response, Texas has not. If you're a first-time buyer in Garland, Mesquite, or Dallas working through old medical bills, here's exactly what that means for your credit and your mortgage.
What's actually protecting you in Texas right now?
With no federal ban and no Texas state law, two things carry the real weight today: voluntary policies the three credit bureaus adopted in 2023, and how automated mortgage underwriting treats medical collections specifically.
| Protection | Applies in Texas? | What it actually does |
|---|---|---|
| Federal CFPB medical-debt ban | No — vacated July 2025 | Would have banned medical debt from reports entirely; not in effect |
| State law backstop (like CO, NY, CA) | No — Texas has not passed one | ~15 other states restrict medical-debt reporting on their own |
| Bureau voluntary policy (2023) | Yes, nationwide including Texas | Paid collections removed immediately; unpaid debt under $500 excluded; 12-month grace period before any unpaid balance appears |
| GSE automated underwriting (since 2023) | Yes, on Fannie/Freddie-backed loans | De-weights medical collections in the scoring used for loan decisions |
What this means concretely for a Texas buyer
If you already paid off a medical collection, it should be off your credit report entirely — that part of the bureau policy is nationwide and doesn't depend on where you live. If it's unpaid and under $500, it's also excluded regardless of state. Where Texas buyers are genuinely more exposed than buyers in a state-law state like Colorado or New York is on unpaid medical debt over $500 that's older than 12 months — in those states, additional legal protections may limit or bar it from appearing on your report at all. In Texas, once that 12-month grace period passes, it can appear, and it's fair game the way any other collection is.
Don't confuse credit score impact with debt-to-income impact
This is the mix-up I see most often. A medical collection sitting on your credit report mostly affects your score — and automated underwriting systems already treat medical collections more leniently than other collection types when calculating that score. But if you're on an active monthly payment plan with a hospital or provider, that recurring payment counts as a real debt in your debt-to-income ratio, the calculation that determines how much home you can actually qualify for. A $200/month medical payment plan can reduce your approved loan amount even if the same medical collection barely dents your score.
Texas vs. a state-law state: a side-by-side example
| Texas (no state law) | Colorado (has a state law) | |
|---|---|---|
| Paid medical collection | Removed immediately (bureau policy) | Removed immediately (bureau policy) |
| Unpaid, under $500 | Excluded (bureau policy) | Excluded (bureau policy) |
| Unpaid, over $500, past 12-month grace period | Can appear on report | Additional state-law restrictions may apply |
| Backstop if bureau policy changes | None — relies entirely on voluntary bureau policy | State law remains regardless of bureau policy |
Named scenario: a Garland first-time buyer with old medical debt
I recently worked with a first-time buyer in Garland with a credit score around 610 — squarely in the 580–680 range most of my first-time clients fall into. She had two old medical collections: one for $340, already excluded under the bureau's under-$500 rule, and one for $1,850 from an ER visit two years earlier, unpaid. Because it was over $500 and past the 12-month grace period, it was still showing on her report and pulling her score down. We didn't need to pay it off in full to move forward — I got her approved on an FHA loan where automated underwriting already de-weighted that specific collection type, and she closed without it being the obstacle she assumed it would be.
What should I do if I have medical debt and want to buy in DFW?
- Pull your full credit report and confirm which medical items are already paid or under $500 — those should already be gone or excluded.
- Don't assume a medical collection disqualifies you. FHA and conventional underwriting both treat medical collections more leniently than other debt types.
- Watch payment plans closely. An active monthly medical payment plan counts in your DTI even when the underlying collection barely touches your score.
- Talk to me before you assume the worst. I review the actual file, not a general rule of thumb.
Frequently Asked Questions
Can medical debt still hurt my credit score in Texas in 2026?
I'm Bond Peter Njoku (NMLS #2670329) and yes, unpaid medical debt over $500 that's been in collections for more than 12 months can still appear on your credit report and affect your score in Texas. The federal rule that would have banned this nationwide was vacated by a federal court in July 2025, and Texas hasn't passed its own state law like the roughly 15 states that have. Call or text me at 469-545-7180 and I'll help you figure out exactly what's on your file and what it's actually costing you.
Why does it matter that a Texas court struck down the federal rule?
I'm Bond Peter Njoku (NMLS #2670329). It's a genuine irony worth knowing about: the CFPB's rule banning medical debt from credit reports nationwide was vacated by a federal court sitting in the Eastern District of Texas in July 2025, and Texas is not one of the states that has since passed its own protective law. That means Texas buyers get the least legal protection of almost any state on this specific issue, even though the ruling originated here. Call or text me at 469-545-7180 if you want to know exactly where that leaves your file.
Does a medical debt in collections lower my debt-to-income ratio approval?
I'm Bond Peter Njoku (NMLS #2670329) and this is where people mix up two different things. A medical collection sitting on your credit report mostly affects your score, and automated underwriting systems already de-weight medical collections in that scoring. But if you're on an active monthly payment plan with a hospital or provider, that recurring payment does count as a debt in your debt-to-income ratio, which can reduce how much home you qualify for. Call or text me at 469-545-7180 and I'll show you how a payment plan on your file actually affects your numbers.
What should I do if I have old medical collections and want to buy a home in DFW?
I'm Bond Peter Njoku (NMLS #2670329). Start by pulling your credit report and confirming whether any medical collections are paid (which should be removed immediately under the bureaus' voluntary policy) or under $500 (which should be excluded entirely). For anything unpaid and over $500, I can often still get you approved on FHA or conventional financing since medical collections carry less weight in automated underwriting than other collection types. Call or text me at 469-545-7180 and I'll walk through your specific credit file with you.
Don't let old medical bills keep you from applying.
I'm Bond Peter Njoku (NMLS #2670329). Let's look at your actual credit report together and build a real plan, not a guess. Call or text me at 469-545-7180, message me on WhatsApp, or start your pre-approval online.