Medical Debt to Stay on Credit Reports After Judge Blocks Biden-Era Rule
Americans’ unpaid medical bills will continue to appear on credit reports after a federal judge struck down a Consumer Financial Protection Bureau (CFPB) rule designed to remove them. Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas ruled that the CFPB overstepped its authority under the Fair Credit Reporting Act, siding with two industry groups and the Trump administration, which had joined the lawsuit.
The rule, finalized near the end of President Biden’s term, aimed to erase roughly $49 billion in medical debt from the credit histories of about 15 million people. It also would have barred lenders from using certain medical information when making credit decisions and prohibited them from accepting or repossessing medical devices as loan collateral.
The CFPB argued that the rule would have improved credit scores—by about 20 points, on average—for millions of Americans and enabled around 22,000 additional mortgage approvals annually. Their research also found that medical debt is not a reliable predictor of creditworthiness, and that medical billing errors often lead to inaccurate credit reporting.
However, Republican lawmakers and financial industry leaders opposed the rule, claiming it would undermine credit accuracy, increase lending risks, and harm access to credit for lower-income borrowers. The Consumer Data Industry Association, a plaintiff in the case, praised the judge’s decision, saying it protects the integrity of the credit system.
Critics also emphasized that the CFPB lacks the authority to write new laws—something reserved for Congress.
Despite the court’s ruling, credit reporting agencies have already made voluntary changes to lessen the impact of medical debt. Since 2022, Equifax, Experian, and TransUnion have stopped reporting paid medical debt and given consumers more time—up to a year—before unpaid medical debt appears on their reports. Medical debts under $500 are no longer reported, and scoring models like FICO and VantageScore have reduced the weight medical debt carries.
Still, Democratic and independent lawmakers argue the CFPB rule would have significantly helped consumers without sacrificing report accuracy. Thirty senators have requested more transparency from the bureau about its handling of the legal challenge and its communications with debt collectors.
