Federal Judge Overturns Biden-Era Medical Debt Credit Rule

A federal judge, Sean Jordan, a Trump appointee, has vacated a Biden administration rule that would have removed medical debt from credit reports, ruling that the Consumer Financial Protection Bureau (CFPB) exceeded its authority under the Fair Credit Reporting Act. The rule, finalized shortly before President Biden left office, aimed to eliminate nearly $50 billion in medical debt from the credit reports of about 15 million Americans, potentially increasing credit scores by an average of 20 points and leading to more mortgage approvals. Credit reporting agencies and industry groups challenged the rule, arguing it would hinder lenders' ability to assess consumers' financial status and cut into their revenue. The CFPB, weakened by prior cuts, did not defend the rule in court, and despite interventions by clinics and individuals, the judge sided with industry groups. The decision maintains medical debt on credit reports, which the CFPB contended is a poor predictor of loan repayment ability and often contains errors. This ruling represents a setback for advocates seeking to alleviate the financial burden of medical debt on Americans.