Your credit score could be negatively impacted by this controversial court ruling about medical debt

Last Friday, a federal judge axed a Biden-era rule from the Consumer Financial Protection Bureau (CFPB) that would have prohibited consumer credit reporting agencies from including certain medical debts on consumer credit reports. 

The CFPB rule amended a Fair Credit Reporting Act (FCRA) regulatory exception that allowed creditors to obtain and use information on medical debts. The rule had been finalized shortly before the Biden administration left office and was set to take effect on March 15. 

However, legal challenges delayed its start date. The rule prohibited creditors from considering medical information when determining credit eligibility and restricted credit reporting agencies from including certain types of medical debt information in consumer credit reports. 

Medical debt will stay on credit reports 

On July 11, 2025, U.S. District Judge Sean Jordan of the Eastern District Court in Texas reversed the Biden-era rule. In his opinion, Jordan, a Trump appointee, said that the court found that rule exceeded the CFPB’s authority under the FCRA. 

The federal lawsuit was filed on January 7, the same day the Biden-era rule had been finalized. In the legal complaint, the Cornerstone Credit Union League and the Consumer Data Industry Association asserted that the rule violated the law and that only Congress had the authority to make such changes. 

The Trump-era CFPB, along with acting director Russell Vought, joined the lawsuit on April 30, with the agency asking the court to vacate the rule.

In response to the ruling, Senate Democrats led by Raphael Warnock of Georgia wrote a letter to Vought asking for an explanation about the reversal. “Medical debt collections information is often inaccurate, and studies show that it is not useful in determining a consumer’s ability to repay other debts,” the senators wrote.

Fast Company reached out to CFPB for comment.

Court order impacts millions of Americans with medical debt 

CFPB research found that a medical bill on a credit report isn’t a good indicator of a person’s ability to repay a loan. Research also showed that medical debt on credit reports contributed to mortgage application denials for loans that consumers would have been able to afford.

In its January announcement, the CFPB stated that the rule would remove an estimated $49 billion in medical bills from credit reports and affect approximately 15 million Americans. It added that people with medical debt on their credit reports could see an average boost of 20 points on their score.

However, now that the rule has been reversed, debt will remain on consumer credit reports, and creditors are still allowed to consider medical debt when making credit decisions.