A recent federal court ruling has struck down a regulation that would have barred the inclusion of medical debt on consumer credit reports. This decision, detailed in a recent analysis by Consumer Finance Monitor (Federal Judge vacates CFPB medical debt rule), marks a significant shift in the regulatory landscape and reverses efforts aimed at removing medical debt from credit evaluations altogether.
What the Ruling Means
The rule in question, originally issued by the Consumer Financial Protection Bureau (CFPB), was designed to prevent credit bureaus from including medical debts in consumer reports and to stop lenders from considering them when evaluating creditworthiness. However, the rule was struck down by a federal judge, who found that the CFPB exceeded its authority under existing credit reporting laws.
As a result, credit bureaus may continue to report medical debt, and lenders, employers, landlords, and other authorized users of credit data can still consider that information when making decisions.
Context and Implications
While the ruling doesn’t impose new requirements, it maintains the status quo for credit reporting practices involving medical debt. This is a notable departure from the CFPB’s recent efforts to reframe medical debt as an unreliable and unfair measure of financial responsibility (see the CFPB’s original rule finalized in January 2025).
Employers who use credit reports in their evaluation processes should be aware that medical debt remains a permissible item on credit files. For consumers, this means unpaid or unresolved medical bills can still impact credit scores and influence decisions related to employment, housing, and financing.
Looking Ahead
Although the court’s decision halts the CFPB’s rule for now, this issue is far from settled. Future appeals, new legislation, or state-level policies may alter how medical debt is handled in credit reporting. For now, medical debt continues to be part of the credit reporting landscape. Employers and consumers alike should monitor ongoing legal and policy developments to stay compliant and informed.
