On July 11, 2025, U.S. District Judge Sean Jordan—appointed by President Donald Trump—struck down a Biden-era rule implemented by the Consumer Financial Protection Bureau (CFPB). The rule, put in place in January 2025, would have removed roughly $49–$50 billion in medical debt from the credit reports of approximately 15 million Americans. It also prohibited lenders from using medical debt in credit-scoring decisions.
What the Reversed Medical Debt Rule Entailed
The CFPB’s rule aimed to stop credit bureaus from factoring medical debt into credit scores. Though the debt wouldn’t have been erased, it would have no longer appeared on credit reports, potentially boosting scores by ~20 points and opening access to around 22,000 additional mortgages annually.
This initiative was part of broader efforts championed by Vice President Kamala Harris and consumer advocates, citing medical debt as involuntary and unreflective of financial responsibility.
Legal Grounds for Reversal
Judge Jordan ruled that the CFPB exceeded its authority under the Fair Credit Reporting Act (FCRA) of 2003. The FCRA does not allow a federal agency to selectively remove certain debt categories from credit reports without explicit Congressional authorization. Importantly, the decision emphasized that while the CFPB may encourage creditors to consider alternative consumer information, it cannot mandate removal of medical debt.
This ruling directly affects the 15 million Americans whose credit scores were poised to improve under the CFPB’s rule. With $50 billion in medical debt still on file, many may see credit scores revert, jeopardizing access to mortgages, student loans, and other credit-dependent opportunities.
Individuals who applied for credit based on the enhanced scores may face denials or revised terms. The reversal poses serious consequences for lower-income and chronically ill Americans who depend on credit for financial stability.
The CFPB, now under leadership aligned with conservative viewpoints, decided not to defend the rule—effectively conceding the legal challenge.
Organizations like the Consumer Data Industry Association applauded the decision. Dan Smith, representing the group, stated the presence of medical debt offers “useful information about a borrower’s ability to repay” and praised the reversal as preserving credit system integrity.
Political and Regulatory Implications
The verdict aligns with broader Trump-era efforts aimed at scaling back regulatory authority across federal agencies, especially concerning financial oversight. It follows attempts to limit the CFPB’s powers overall, including rollbacks on junk fee rules and other consumer protection measures.
Moreover, this decision coincides with legislative reductions in Medicaid funding and eligibility criteria, potentially weakening the safety net for vulnerable populations.
With the court ruling emphasizing statutory limitations of the CFPB, Congressional approval appears essential for any future removal of medical debt from credit reports. Consumer advocates may now lobby for laws that explicitly permit such measures, but passage would require broad bipartisan support.
Alternatively, the CFPB or states might explore more modest, legally defensible alterations in credit reporting rules—such as delaying debt reporting or increasing thresholds—without overstepping FCRA authority.
Medical debt remains a pressing challenge in America. It is estimated that about 1 in 12 U.S. adults holds at least $250 in unpaid medical bills, significantly elevating the risk of bankruptcy, housing instability, and limited access to credit.
While some hospitals and states have implemented forgiveness programs, systemic reform has stalled. The courts’ reinstatement of medical debt in credit reports underscores a wider need for public-policy solutions addressing escalating healthcare costs and financial insecurity .
Judge Jordan’s ruling effectively halts the CFPB’s bid to exclude medical debt from credit scoring. Without legislative backing, the CFPB lacks the authority to pursue similar reforms again. As millions brace for potential credit score declines, the spotlight shifts toward Congress to decide whether to legitimize medical debt exclusion or pursue alternative protective measures.
