A federal judge in Texas, appointed by Trump, has overturned a rule put in place by the Consumer Financial Protection Bureau (CFPB) during the Biden administration. The rule aimed to eliminate medical debt from credit reports but was deemed to exceed the CFPB’s authority by Judge Sean Jordan of Texas’s Eastern District. According to Jordan, the Fair Credit Reporting Act does not allow the CFPB to remove medical debt from credit reports.
The CFPB argued that removing medical debt from credit reports would have boosted the credit scores of many families by an average of 20 points. However, the national credit reporting agencies, Experian, Equifax, and TransUnion, had already announced plans to remove medical collections under $500 from consumer credit reports.
The CFPB estimated that the rule would have erased $49 million in medical debt from the credit reports of 15 million Americans. Medical debt disproportionately affects people of color, with higher percentages of Black and Latino individuals carrying such debt compared to white individuals.
Established after the 2008 financial crisis, the CFPB oversees various segments of the consumer finance industry. Earlier this year, the Trump administration requested a halt to most of the agency’s operations, effectively shutting it down.
