Federal Judge in Texas Overturns Biden-Era Rule on Medical Debt in Credit Reports
In a significant ruling, U.S. District Judge Sean Jordan in Texas has struck down a Biden administration regulation that aimed to remove medical debt from credit reports, affecting approximately 15 million Americans. The rule, implemented by the Consumer Financial Protection Bureau (CFPB) in January before President Joe Biden’s term concluded, did not eliminate medical debt but modified how credit scores were calculated, effectively erasing $50 million in medical debt from credit reports.
Judge Jordan, appointed by former President Donald Trump, determined that the Fair Credit Reporting Act does not grant the CFPB authority to exclude medical debt from credit reports. The CFPB had projected that the rule would facilitate an additional 22,000 mortgages annually and improve Americans’ credit scores by an average of 20 points. Although the court blocked the rule’s implementation, Judge Jordan noted that the CFPB retains the ability to encourage creditors to incorporate alternative data in credit assessments.
