![\"Medical](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/07\/N2LQLICZLRMQ7N6SACAVKWT57E.jpg\")
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Medical plan cards are seen in Portland, Ore. A federal judge this past week overturned a Consumer Financial Protection Bureau rule that would have removed medical bills from credit reports and prevented lenders from making decisions based on that medical information.<\/p>\n
Jenny Kane<\/p>\n
A federal judge has ruled that medical debt can remain on Americans\u2019 credit reports, canceling a policy set in place by the Biden administration to help relieve the burden of health care expenses weighing on nearly a third of the population.<\/p>\n
The ruling \u2014 handed down by U.S. District Court of Texas\u2019 Eastern District Judge Sean Jordan on Friday \u2014 was a major blow to the Consumer Financial Protection Bureau (CFPB), which has fought against medical debt as a metric of credit worthiness.<\/p>\n
In the waning days of the Biden administration in January, the federal banking and financial services watchdog introduced a rule<\/a> to disallow medical debts from appearing on American credit reports in an effort to keep that information from influencing lenders that consider medical expenses to assess borrowers\u2019 merit.<\/p>\n \u201cPeople who get sick shouldn\u2019t have their financial future upended,\u201d then-CFPB Director Rohit Chopra said at the time<\/a>. \u201cThe CFPB\u2019s final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe.\u201d<\/p>\n Credit scores factor into a person\u2019s ability to rent or buy a home, secure a car loan and other major financial decisions that can determine one\u2019s socioeconomic footing.<\/p>\n In its January order, the CFPB cited its 2014 research<\/a>, which found that medical debt was not a good indicator as to whether a borrower would default on loans, and therefore was not a necessary inclusion on credit reports.<\/p>\n But Cornerstone Credit Union League, which brought suit<\/a> against the agency that same month, argued that the CFPB\u2019s order had exceeded the independent agency\u2019s authority.<\/p>\n Judge Jordan agreed, writing in his decision<\/a> last week that every major \u201csubstantive provision of the Medical Debt Rule\u201d had breached the reach of the CFPB\u2019s jurisdiction.<\/p>\n Following Jordan\u2019s ruling, certain advocacy groups decried the move as a blow to the millions who carry medical debt.<\/p>\n \u201cThis ruling is a disappointing setback \u2014 but it will not stop the growing movement to protect people from the financial harm of medical debt,\u201d Colin Reusch, policy director at Community Catalyst, a nonprofit that advocates for health care affordability<\/a>, said in a statement.<\/p>\n \u201cA court sided with corporate profiteers, rather than the public.\u201d<\/p>\n But the Consumer Data Industry Association (CDIA), a trade association representing some of the nation\u2019s major credit bureaus, said the judge\u2019s ruling will help protect lenders against granting loans to borrowers unlikely to make good on their debts.<\/p>\n \u201cAmerica\u2019s financial system is the best in the world because it is based on a full, fair and accurate credit reporting system,\u201d CDIA President and CEO Dan Smith said in a statement to NPR. \u201cInformation about unpaid medical debts is an important element in assessing a consumer\u2019s ability to pay. This is the right outcome for protecting the integrity of the system.\u201d<\/p>\n An estimated 100 million U.S. citizens carry health care debt, according to an investigation by Kaiser Health News and NPR<\/a>, creating a problem that is uniquely American<\/a>. Those with high health care debts<\/a> are at risk of homelessness and other hardship.<\/p>\n More than a dozen states<\/a> have introduced laws to keep medical debt from affecting U.S. consumers\u2019 credit, but the topic remains controversial.<\/p>\n Congressional Republicans have denounced the CFPB\u2019s attempts to erase medical debt from credit reports. And onetime Trump ally and former Department of Government Efficiency orchestrator<\/a> Elon Musk has called for the elimination of the agency altogether.<\/p>\n