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"This decision will hurt people's financial futures, including their ability to buy a home, care for their families, or even get a job," said the president and CEO of the nonprofit Undue Medical Debt.
A Trump-appointed judge axed a Biden-era rule on Friday that would have removed medical debt from credit reports and barred lenders from using certain medical information in loan decisions.
The rule, enacted under the authority of the Fair Credit Reporting Act, would have removed an estimated $49 billion in medical bills from the credit reports of about 15 million people.
But after a lawsuit brought by two industry groups with the support of Republicans in Congress who attempted to block it, Judge Sean Jordan of the U.S. District Court of Texas' Eastern District ruled that the Consumer Financial Protection Bureau (CFPB) had exceeded its authority in introducing the rule.
According to the CFPB, those with medical debt on their credit reports would have received a 20-point boost to their credit scores on average as a result of the rule. It would have led to an estimated 22,000 more mortgages being approved for people struggling with medical debt.
According to a report by the Peterson Center on Healthcare and KFF last year, roughly 1 in 12 adults has over $250 in unpaid medical debt.
"People who get sick shouldn't have their financial future upended," said CFPB Director Rohit Chopra at the time of the rule's passage in January 2025. "The CFPB's 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."
The consumer reports industry lobbied furiously against the measure. Two industry groups—the Consumer Data Industry Association and the Cornerstone Credit Union League—brought the lawsuit before Judge Jordan. Meanwhile, reporting from Accountable.US in March revealed that Republicans on the House Financial Services Committee accepted a combined $867,000 from trade groups opposed to the rule.
Using the same talking points as the industry, they then attempted to block the rule, arguing that it would "weaken the accuracy and completeness of consumer credit reports."
However, according to research by the CFPB, medical debt on credit reports often has no bearing on a person's ability to pay back other loans.
Medical bills also frequently contain mistakes. According to a survey by the Commonwealth Fund last year, more than 45% of respondents were billed for a service they thought was covered by insurance. The trade magazine Becker’s Hospital Review, meanwhile, has estimated that 80% of medical bills contain errors that inflate costs.
"Medical debt unjustly damages the credit scores of millions, limiting their ability to obtain affordable credit, rent safe housing, or even get a job," said the National Consumer Law Center after the rule was introduced.
Now, as a result of its being struck down, the 15 million Americans who have medical debt on their credit reports will see an average of $3,200 remaining on their reports that would have otherwise been erased.
"The facts are clear: Medical debt is not predictive of creditworthiness," said Allison Sesso, the president and CEO of the nonprofit Undue Medical Debt, on Monday. "This decision will hurt people’s financial futures, including their ability to buy a home, care for their families, or even get a job—all because they got sick, injured, or were born with a chronic condition through no fault of their own. It will also further decrease their willingness to get the care they need."
The ruling also marks the latest attack by Republicans on the CFPB. In February, the Trump administration attempted to unilaterally and illegally shut down the consumer watchdog agency. His effort to dismantle it was later blocked by a federal judge.
Since its creation in 2011, the CFPB has relieved $21 billion worth of debt for nearly 200 million Americans. It recouped that money from powerful financial institutions and credit card companies that had engaged in predatory practices and saddled Americans with junk fees.
But by cracking down on corporate abuses, it became the bane of Republican lawmakers and their corporate donors. Many top Trump donors sought to kill the CFPB because it was coming after the actions of their companies.
Elon Musk's company Tesla was facing scrutiny over its auto loan policies, which had received hundreds of complaints from customers. His social media company, X, was also being examined for its payment policies.
Another top Trump donor, investor Marc Andreesen, launched a broadside against the bureau when it ordered a payday lending company he'd invested in to pay tens of millions worth of fines for engaging in predatory lending.
"Judge Sean Jordan, a Trump-appointed judge, joined congressional Republicans in making it easier for the Trump administration to raise costs on millions of Americans," said Accountable.US executive director Tony Carrk.
"Not only are they dismantling healthcare for 17 million through their big, ugly betrayal, but they're dooming millions more with low credit scores due to illness and injury," he continued. "Republicans are holding a grudge against the CFPB, and it's costing Americans money."
As we enter a period of our history defined by billionaire oligarchs and the rule of the richest, it’s more important than ever to have agencies that stand up for everyday people, not only the ultra rich class.
Imagine a high-stakes football game where one team is notorious for playing dirty, skirting the rules, and making the game about brute force, not fair play. Thank goodness for the referee, right?
Well, now imagine that right in the middle of the game, the ref gets yanked off the field. Unfortunately, that’s the situation American consumers are facing now—and the other team is free to play as dirty as they please.
Since its inception in 2010, the CFPB—the Consumer Finance Protection Bureau—has been America’s indispensable referee. It’s the fast-moving, watchful eye ensuring that big banks, online lenders, and credit agencies play fair with their customers.
Musk is trying to destroy the CFPB to enrich himself—and prevent the agency from holding him accountable for how he treats X-Money users.
But the Trump administration is now trying to kick that referee off the field—permanently.
Without the CFPB, megabanks, Big Tech, and small-time fraudsters will be free to break the rules unchecked, leaving everyday consumers defenseless in the face of the fraud, abuses, and junk fees that are so prevalent in consumer finance.
With Elon Musk’s minions in the vanguard, the Trump administration has taken its slash-and-burn approach to the CFPB, determined to dismantle any government institution that stands in the way of corporate greed. Musk and Trump are defending predators, scammers, and crooks because a strong CFPB means less profit for financial companies.
The public knows the true value of the CFPB. According to a poll from Democratic and Republican pollsters, the CFPB is popular across the country—and even across party lines. Nearly 4 in 5 people say they support the agency, including 75% of Republicans and 86% of Democrats.
The agency’s popularity is no coincidence. It’s been earned through relentless dedication to standing up for people.
Since 2010, the CFPB has won more than $21 billion in restitution and cancelled debts to consumers who were scammed by financial institutions. The CFPB has also created safeguards against future financial crises, especially in housing, and cracked down on all manner of junk fees.
Congress established the CFPB as an independent agency to protect consumers from predatory financial practices. Now we have to defend the CFPB from political sabotage. In addition to Trump’s attacks, industry-friendly lawmakers are working to weaken the CFPB, threatening its ability to keep an eye on powerful financial actors.
Congress must reject these attacks and ensure the CFPB remains ready to do the job it has done so well. That includes defending the CFPB’s independence, funding, and integrity—as well as resisting attempts to roll back existing safeguards.
A CFPB measure to limit bank overdraft fees to $5, down from the typical $35 per transaction, would save 23 million households $5 billion annually. But that rule is now on the congressional chopping block. Additionally, Congress must protect CFPB’s measure to keep medical debt off the credit reports of the 15 million Americans burdened by unexpected medical expenses.
Before the Trump administration arrived, the CFPB also created protections for the millions of users of digital payment apps and wallets to prevent fraud, safeguard people’s sensitive personal information, and prevent Big Tech and other firms from freezing or deactivating accounts without notice or explanation.
Notably, this rule would apply to the partnership between Visa and X, Elon Musk’s social network formerly known as Twitter. Now, Musk is trying to destroy the CFPB to enrich himself—and prevent the agency from holding him accountable for how he treats X-Money users.
As we enter a period of our history defined by billionaire oligarchs and the rule of the richest, it’s more important than ever to have agencies that stand up for everyday people, not only the ultra rich class. People deserve a tough, honest referee in Washington that can stand up to Wall Street and other financial predators.
If the CFPB can’t blow the whistle, there’s no doubt they will play dirty.
The agency "effectively dared the incoming Trump administration and its Republican allies in Congress to undo rules that are broadly popular," wrote one healthcare reporter.
Months after more than half of respondents to an Associated Press poll said it was "extremely or very important" for the federal government to take action to help people with medical debt, the Consumer Financial Protection Bureau on Tuesday finalized a rule to keep such debt off credit reports.
With broad public support, the rule appeared to be an uncontroversial slam dunk for the Biden administration in the last days of President Joe Biden's presidency—but Republicans, who now have majorities in Congress and are poised to take over the White House in less than two weeks, have signaled that they would take action to undo the CFPB's regulations, including the medical debt rule.
U.S. Sen. Tim Scott (R-S.C.), the new chair of the Senate Banking Committee, said last month that the CFPB should halt all rulemaking until President-elect Donald Trump takes office.
"It is paramount that President Trump can begin his administration on January 20 with a fresh slate to implement the economic agenda that the American people resoundingly voted for," Scott said.
The senator's comments suggested that Americans who voted for Trump did so in order to continue paying overdraft fees, having their personal information sold by predatory data brokers, and being penalized for owing medical bills—all of which the CFPB has taken action on since the November elections.
As Noam N. Levey wrote at KFF Health News, the CFPB on Tuesday "effectively dared the incoming Trump administration and its Republican allies in Congress to undo rules that are broadly popular and could help millions of people who are burdened by medical debt."
"People who get sick shouldn't have their financial future upended."
The new rule would remove $49 billion in unpaid medical debt from credit reports by amending Regulation V, which implements the Fair Credit Reporting Act.
Lenders are restricted from obtaining or using medical information to make lending decisions. But federal regulators have created an exception to that restriction, allowing companies to consider medical debt. The new rule ends that exception by banning medical bills on credit reports, which the CFPB said has led to a practice of using the credit reporting system to coerce payments even if bills are inaccurate, as they frequently are, according to the agency.
About 15 million people will be helped by the new regulation, said the CFPB, with credit scores of people with medical debt boosted by an average of 20 points.
An estimated 100 million Americans owe debt for healthcare they've obtained, forcing many to cut spending on groceries, housing, and other essentials.
An informal KFF Health News poll of people facing eviction or foreclosure in the Denver area in 2023 found that nearly half of people surveyed said medical debt played a role in their housing insecurity.
The inclusion of medical debt on credit reports by companies like Experian, Equifax, and TransUnion can harm Americans' ability to obtain jobs, mortgages, and rental apartments, even as CFPB research shows that medical debt is a poor predictor of whether a consumer will repay a loan.
"People who get sick shouldn't have their financial future upended," said CFPB Director Rohit Chopra. "The CFPB's 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."
Billionaire Trump megadonor Elon Musk, who has become a top adviser to the president-elect and was picked to co-lead the proposed Department of Government Efficiency, has made clear that the CFPB would be a key target of the advisory body, calling for the agency to be "deleted" in November.
Despite Republicans' repeated claims that Trump will lead the party in securing an agenda that serves working families, lobbying by the credit reporting industry over the medical debt rule has made clear whose side the GOP is on.
Equifax said in August, two months after the CFPB proposed the rule, that the government is "not permitted" to regulate the industry in such a way.
House Financial Services Committee Chairman Patrick McHenry (R-N.C.) also called the proposal "regulatory overreach."
Chopra said last month that despite Republicans' objections, the CFPB would not "be a dead fish" ahead of Trump's term.
"We will continue to defend consumers' rights," he said, "and to hold companies accountable."