There is no federal rule keeping medical debt off your credit report; only the credit bureaus' voluntary policies and the general FCRA accuracy rules apply.
Approving a consent judgment between trade groups and the CFPB over objections from consumer intervenors, the court held that the Medical Debt Rule exceeded the CFPB's statutory authority because it conflicts with the plain text of FCRA sections 1681b(a) and 1681b(g)(1)-(2), which allow coded medical-debt information in consumer reports and its use by creditors. The court vacated the rule in its entirety.
- Case
- Cornerstone Credit Union League v. Consumer Financial Protection Bureau, No. 4:25-cv-00016-SDJ (E.D. Tex.)
- Citation
- Cornerstone Credit Union League v. CFPB, No. 4:25-cv-16-SDJ (E.D. Tex. July 11, 2025) (mem. op. and final judgment), vacating 90 Fed. Reg. 3276 (Jan. 14, 2025)
- Court or agency
- U.S. District Court for the Eastern District of Texas (Sherman Division)
- Date
- July 11, 2025
- Law
- FCRA
Summary
In January 2025 the CFPB finalized a rule to bar most medical debt from credit reports used by lenders, estimating it would affect 15 million Americans with $49 billion in medical bills on their reports. Industry groups sued in Sherman, Texas. After a change in leadership, the CFPB agreed the rule was unlawful, and on July 11, 2025 Judge Sean D. Jordan vacated it before it ever took effect.
Background
The Fair Credit Reporting Act (FCRA) generally bars creditors from using medical information to decide whether to extend credit. Since 2005, however, a regulatory “financial information” exception had allowed creditors to consider medical debts like other debts.
On January 14, 2025, the CFPB published a final rule removing that exception. The rule also barred credit bureaus from giving creditors reports containing medical-debt information that creditors could not use. The CFPB estimated that 15 million Americans had $49 billion in medical bills on their credit reports. The rule was scheduled to take effect March 17, 2025.
The Cornerstone Credit Union League and the Consumer Data Industry Association sued in the Eastern District of Texas in January 2025. After the change in administration, the CFPB joined the plaintiffs in asking the court to enter a consent judgment declaring the rule unlawful. The court let two individuals and two advocacy organizations (Tzedek DC and the New Mexico Center on Law and Poverty) intervene to defend the rule, and it kept the effective date on hold while the case was pending.
What the court held
On July 11, 2025, Judge Sean D. Jordan found the proposed consent judgment fair, adequate and reasonable and adopted its legal conclusions:
- FCRA allows coded medical debt. Section 1681b(g)(1) lets credit bureaus include medical-debt information in reports when it is coded to hide the provider and the nature of the services. The rule’s ban contradicted that text.
- Creditors may use it. Section 1681b(g)(2) lets creditors obtain and use properly coded medical-debt information. The CFPB can expand permitted uses, but it cannot take away uses the statute allows.
- No authority to tie reports to state law. The rule’s ban on furnishing reports when state law barred the creditor from using medical debt exceeded the CFPB’s authority under section 1681b(a).
The court vacated the rule in full and remanded to the CFPB. It rejected the intervenors’ argument that a rule adopted through notice and comment could be undone only through new rulemaking. The court also said that a state law prohibiting a bureau from furnishing reports with coded medical information would be preempted. As of this update, NCLC, which represented the intervenors, lists the case as resolved.
Our take
This ruling comes from a Texas federal court and directly affects how medical debts appear on Texans’ credit reports. The decision rests on the FCRA’s text, so a future rule along the same lines would face the same obstacle unless Congress changes the statute.
The CFPB has since moved further in the same direction. On October 28, 2025, it issued an interpretive rule stating that the FCRA broadly preempts state credit-reporting laws, including state laws that would keep medical debt off reports. That rule replaced a 2022 interpretive rule taking the opposite view, which the CFPB withdrew in May 2025. Interpretive rules guide the agency but do not bind courts.
What it means if you’re sued in Texas
A lawsuit over a medical bill is a separate question from credit reporting. You can still challenge whether you owe the amount, whether insurance was properly billed, and whether the plaintiff owns the debt.
On the reporting side, the bureaus’ voluntary policies still exclude paid medical collections and those with an original balance under $500, and they generally wait a year before reporting unpaid ones. Inaccurate reporting can be disputed under the FCRA.
If medical debt is affecting your credit or you have been sued over a medical bill, a free case review is available.
Takeaway
Medical collections can still be reported subject to the bureaus' policies (no paid debts, nothing under $500, nothing less than a year old). Dispute anything that breaks those policies or is inaccurate.
Sources
Primary authority
- Memorandum Opinion and Order, Dkt. 52 (E.D. Tex. July 11, 2025) (CourtListener/RECAP)
- Final Judgment, Dkt. 53 (E.D. Tex. July 11, 2025) (CourtListener/RECAP)
- Medical Debt Rule (Federal Register, 90 Fed. Reg. 3276)
- FCRA preemption interpretive rule (Federal Register, 90 Fed. Reg. 48710)
Secondary sources
- Federal Judge Vacates CFPB Medical Debt Rule (Ballard Spahr, Consumer Finance Monitor)
- Cornerstone Credit Union League et al. v. CFPB et al. (National Consumer Law Center case page)
This summary and analysis are general information, not legal advice. Later decisions, amendments or agency actions may change the law; check the current status before relying on it.