⚖️ Federal Judge Strikes Down Biden Medical-Debt Rule

 

A Texas federal judge, Sean Jordan, has overturned a Biden-era Consumer Financial Protection Bureau (CFPB) rule that would have removed medical debt from credit reports and prevented lenders from factoring it into loan decisions.

📊 Impacts & Numbers

• 15 million Americans were poised to benefit, with an estimated $49 billion in medical debt being wiped from credit files.

• On average, credit scores for affected individuals could have increased by around 20 points.

• This change was expected to bolster mortgage approvals by approximately 22,000 annually.

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🧭 Why Did the Judge Rule This Way?

• The judge determined that the CFPB overstepped its authority under the Fair Credit Reporting Act, suggesting it improperly tried to rewrite federal law.

• Credit bureaus and industry groups have also expressed concern that omitting medical debt may lead to incomplete or less reliable credit reports.

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👨‍👩‍👧‍👦 Who Is Most Affected?

• Roughly one in five Americans carries some form of medical debt on their credit report.

• The burden disproportionately affects Black and Latino populations, with 28% of Black and 22% of Latino adults impacted compared to 17% of white adults.

What Happens Next?

Bottom Line

🔍 What Happens Next? ✅ Bottom Line