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Medical debt will continue to appear on Americans' credit reports after a federal judge overturned a Biden-era rule. On Friday (July 11), U.S. District Judge Sean Jordan, appointed by President Donald Trump, ruled that the Consumer Financial Protection Bureau (CFPB) exceeded its authority under the Fair Credit Reporting Act. The decision came after two industry associations challenged the rule, which was finalized just before President Joe Biden left office in January 2025.
The rule aimed to remove approximately $49 billion in medical debt from the credit reports of about 15 million people. It also sought to prevent lenders from using medical devices as collateral and from repossessing them if loans were unpaid. According to the CFPB, the rule could have increased credit scores by an average of 20 points and led to the approval of 22,000 additional mortgages annually.
Judge Jordan's ruling was met with approval from industry groups, who argued that the rule would lead to inaccurate credit reports and undermine the financial system. Dan Smith, CEO of the Consumer Data Industry Association, stated, "Information about unpaid medical debts is an important element in assessing a consumer’s ability to pay."
Despite the ruling, some changes have already been made by credit reporting agencies. CNN reports that Experian, Equifax, and TransUnion have removed medical debt under $500 from credit reports and extended the grace period before unpaid medical debt appears.