Judge reverses Biden rule that left medical debt off credit reports
FILE-An empty hospital bed is shown at Mount Sinai South Nassau hospital in Oceanside, New York. (Photo by Jeffrey Basinger/Newsday RM via Getty Images)
A federal judge repealed a rule by former President Joe Biden that would have removed medical debt from Americans' credit reports.
U.S. District Judge Sean Jordan, a President Donald Trump appointee, ruled on July 11 that the policy was an overreach of the Consumer Financial Protection Bureau’s (CFPB) authority.
Jordan asserted in his decision that the Fair Credit Reporting Act does not permit the CFPB to remove medical debt from reports. But, per the filing, the agency can "permit" or urge creditors to use other types of information, The Hill reported.
What was the Biden-era rule to ban medical debt from credit reports?
The backstory: In 2023, the Biden administration first announced plans for the rule and the Consumer Financial Protection Bureau, an independent agency, finalized the rule in January 2025 as President Joe Biden was preparing to leave office.
This policy was created to eliminate roughly $49 billion from about 15 million Americans' credit reports, meaning lenders couldn’t base their decisions to issue a loan solely on an individual’s medical debt.
RELATED: Medical debt banned from appearing on credit reports in new Biden administration rule
The CFPB stated that medical debt is a poor predictor of an individual's ability to repay a loan. Experian, Equifax and TransUnion, the three national credit reporting agencies, said last year that they were removing medical collections debt under $500 from U.S. consumer credit reports.
The new rule was established after Republican congressional leaders called on Biden’s financial regulators, including the CFPB, to stop "finalizing partisan rulemaking" in the days leading up to President-elect Donald Trump’s inauguration on Jan. 20, 2025.
The change was projected to increase credit scores by an average of 20 points and would lead to 22,000 additional mortgages being approved every year, according to officials.
The Source: Information for this story was provided by previous LIVENOW from FOX reporting, Axios, and The Hill. This story was reported from Washington, D.C.