Federal Judge Reverses Rule Removing Medical Debt From Credit Reports

Federal Judge Reverses Rule Removing Medical Debt From Credit Reports

2025-07-15 politics

Texas, Monday, 14 July 2025.
On July 11, 2025, a Texas judge vacated a Biden-era regulation, reinstating medical debt on credit reports. This affects nearly 15 million Americans, potentially hindering credit access.

Background of the Ruling

The federal judge, appointed by President Donald Trump, vacated a Consumer Financial Protection Bureau (CFPB) rule from the Biden administration, which was originally finalized in January 2025 [2][3][5]. This rule aimed to remove medical debt from credit reports, potentially impacting around 15 million Americans and erasing approximately $49 billion in medical debt [3][5]. U.S. District Judge Sean Jordan’s ruling argued that the CFPB exceeded its authority under the Fair Credit Reporting Act [6].

The reversal follows objections from the Trump administration and industry groups, including the Consumer Data Industry Association, which argued that medical debt information is critical in assessing consumer creditworthiness [4][6]. This decision aligns with President Trump’s broader financial policy goals, which include restricting consumer protection regulations deemed excessive by his administration [7]. Vice President Kamala Harris had defended the rule, stating it would enable easier access to loans for those burdened by medical debt [2].

Implications of the Decision

This development could lead to tighter credit access for those with medical debt, many of whom acquired debt from unforeseen medical emergencies [5][6]. Credit reporting industry representatives argue that inclusive credit reports provide a complete financial picture, while critics fear this may disproportionately affect the financially vulnerable [4][6]. By maintaining medical debt visibility in credit reports, the ruling alters the landscape of creditworthiness criteria, impacting potential credit score improvements estimated at 20 points for those affected [2][4].

Impact and Future Directions

While the CFPB cannot currently reissue a similar rule, discussions on the role of medical debt in credit assessments continue, with advocacy from both consumer protection groups and industry bodies [4][5][6]. This decision highlights ongoing tensions in U.S. healthcare policy and consumer finance regulation, as various states explore their own legislative measures to mitigate the impact of medical debt reporting [4][6]. The ruling reflects ongoing debates over federal versus state jurisdiction in consumer financial protections [6][7].

Sources


medical debt credit reports