A federal judge has overturned a Biden‑era Consumer Financial Protection Bureau rule that would have erased unpaid medical debt from consumer credit reports — a move expected to affect nearly 15 million Americans.
U.S. District Judge Sean Jordan, a Trump appointee, ruled that the CFPB lacked statutory authority under the Fair Credit Reporting Act to implement the sweeping change. He sided with two credit industry trade groups — the Cornerstone Credit Union League and the Consumer Data Industry Association — which sued the agency, alleging overreach.
The rule, finalized by the CFPB in January shortly before the end of the Biden administration, would have removed an estimated $49 billion in medical debt from credit reports, lifting scores by about 20 points for millions and potentially enabling 22,000 additional mortgage approvals annually.
“The Consumer Financial Protection Bureau exceeded its authority in banning medical debt from credit reports,” Jordan wrote, echoing industry concerns that the change would alter the accuracy and completeness of credit data.
The CFPB, created by Congress in the wake of the 2008 financial crisis, argued that medical debt is a poor predictor of creditworthiness and disproportionately burdens Black and Latino consumers. The new rule had been designed to curtail reporting of such debt and prevent lenders from considering it in credit decisions.
Industry groups countered that excluding medical debt would deprive lenders of essential information, risking incomplete credit assessments.
Experian, Equifax and TransUnion had already eliminated medical debt under $500 from reports last year and extended reporting grace periods — but full implementation of the Biden‑era rule would have barred all unpaid medical bills.
Supporters of the rule noted that nearly 20% of Americans have at least one medical debt in collections, accounting for more than half of all collection accounts. Studies by the CFPB and consumer advocates show that medical debt is often erroneous and stems from one-time emergencies.
