Federal judge reverses rule that would have removed medical debt from
credit reports
[July 16, 2025]
By ADRIANA MORGA and CORA LEWIS
NEW YORK (AP) — A federal judge in Texas removed a Biden-era finalized
rule by the Consumer Financial Protection Bureau that would have removed
medical debt from credit reports.
U.S. District Court Judge Sean Jordan of Texas's Eastern District, who
was appointed by President Donald Trump, found on Friday that the rule
exceeded the CFPB 's authority. Jordan said that the CFPB is not
permitted to remove medical debt from credit reports according to the
Fair Credit Reporting Act, which protects information collected by
consumer reporting agencies.
Removing medical debt from consumer credit reports was expected to
increase the credit scores of millions of families by an average of 20
points, the bureau said. The CFPB states that its research has shown
outstanding healthcare claims to be a poor predictor of an individual’s
ability to repay a loan, yet they are often used to deny mortgage
applications.
The three national credit reporting agencies — Experian, Equifax and
TransUnion — announced last year that they would remove medical
collections under $500 from U.S. consumer credit reports. The CFPB’s
rule was projected to ban all outstanding medical bills from appearing
on credit reports and prohibit lenders from using the information.
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Medical bills are seen in Temple Hills, Md., on June 26, 2023. (AP
Photo/Jacquelyn Martin, File)
 The CFPB estimated the rule would
have removed $49 billion in medical debt from the credit reports of
15 million Americans. According to the agency, one in five Americans
has at least one medical debt collection account on their credit
reports, and over half of the collection entries on credit reports
are for medical debts. The problem disproportionately affects people
of color, the CFPB has found: 28% of Black people and 22% of Latino
people in the U.S. carry medical debt versus 17% of white people.
The CFPB was established by Congress after the 2008 financial crisis
to monitor credit card companies, mortgage providers, debt
collectors and other segments of the consumer finance industry.
Earlier this year, the Trump administration requested that the
agency halt nearly all its operations, effectively shutting it down.
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