What's Happening in Credit and Lending Right Now

Consumer credit markets are in a period of structural change — driven by regulatory action, federal court decisions, rate environment shifts, and new product categories entering the reporting system. Several changes that seemed settled are being contested; others that seemed impossible have happened. Staying oriented to the landscape matters whether you're trying to understand your credit report, make a borrowing decision, or plan around student loan policy.

Medical Debt and Credit Reporting

The three major credit bureaus — Equifax, Experian, and TransUnion — voluntarily removed medical debt under $500 from credit reports in 2023. The CFPB finalized a rule in early 2025 to remove all medical debt from credit reports, citing research that medical debt is a poor predictor of credit risk and disproportionately appears on the reports of lower-income consumers through no fault of their own. As of early 2025, that rule is facing legal challenges. The VantageScore 4.0 model already reduced the weight of medical debt in scoring, and FICO Score 9 excludes paid medical collections — though many lenders still use older FICO versions that treat medical debt more harshly.

The Student Loan Landscape

The SAVE plan — the Biden administration's income-driven repayment plan that set undergraduate loan payments at 5% of discretionary income — was blocked by federal courts in 2024 and remains in legal limbo as of early 2025. Borrowers who enrolled in SAVE were placed in interest-free forbearance while the case worked through the courts, but the plan's long-term status is uncertain. The broader IDR landscape has multiple surviving plans (IBR, ICR, PAYE) for borrowers who need alternatives. PSLF continues to function and has approved over $60 billion in forgiveness to date — the program works for borrowers who meet the requirements.

Rate Environment and Consumer Credit

The Federal Reserve raised rates aggressively from 2022 to 2023, bringing the federal funds rate to a 23-year high. Credit card APRs, which track the prime rate closely, reached historical highs — average APRs exceeded 21% for the first time on record. The Fed began cutting rates in late 2024, but credit card rates typically lag on the way down more than on the way up. Auto loan rates have eased from 2023 peaks for prime borrowers; mortgage rates remain elevated relative to the pandemic-era lows but below the 2023 peaks. The rate environment has made carrying credit card balances significantly more expensive and borrowing for large purchases less attractive than in 2020 to 2021.

BNPL Entering the Credit System

Buy now, pay later services are being brought under the federal credit card regulatory framework following a 2024 CFPB interpretive rule. This means BNPL providers must provide disclosures, handle disputes, and issue periodic statements similar to credit card issuers. It also means BNPL payment history — positive and negative — is increasingly flowing into credit reports. For consumers, this is a significant shift: BNPL is no longer off-credit-record debt, and both on-time payments and missed payments are starting to affect credit files in ways they didn't previously.