Federal Judge Reverses Medical Debt: 5 Ways to Protect Your Credit Score Now

In a pivotal ruling, a federal judge reverses medical debt relief policy, reinstating medical debt as a factor in credit reporting across the United States. Announced on July 11, 2025, this decision by U.S. District Judge Sean Jordan in Texas overturns a Biden-era regulation that removed $49 billion in medical debt from the credit reports of approximately 15 million Americans. As this change ripples through the financial landscape, it’s critical for consumers to understand its implications and take proactive steps to safeguard their credit scores. This article explores the ruling, its impact, and offers five actionable strategies to protect your financial health, ensuring you stay ahead in this challenging environment.

Background: The Biden-Era Medical Debt Rule

In January 2025, the Consumer Financial Protection Bureau (CFPB) introduced a groundbreaking rule to exclude medical debt from credit reports. This policy, championed by former Vice President Kamala Harris, aimed to alleviate the financial burden on millions by removing approximately $49 billion in medical debt from credit reports, affecting an estimated 15 million Americans. According to the CFPB, the rule was expected to:

• Boost credit scores by an average of 20 points for those with medical debt.
• Facilitate 22,000 additional mortgage approvals annually.
• Prevent lenders from using medical information in lending decisions, reducing coercive debt collection practices.

The rule was endorsed by the American Medical Association but faced opposition from trade groups representing banks and credit bureaus, who argued that excluding medical debt could obscure borrowers’ repayment risks. Despite its promise, the regulation was short-lived, facing legal challenges that culminated in its reversal.

The Ruling: Why Was Medical Debt Relief Reversed?

On July 11, 2025, U.S. District Judge Sean Jordan, appointed by former President Trump, ruled that the CFPB lacked authority under the Fair Credit Reporting Act to eliminate medical debt from credit reports. The decision came in response to requests from the Trump administration and industry groups, including the Consumer Data Industry Association, which argued that medical debt reflects a borrower’s ability to repay loans. Key details of the ruling include:

• Legal Basis: Judge Jordan cited a 2003 law on accurate credit reporting, stating it did not permit the CFPB to exclude medical debt.
• Industry Support: Dan Smith of the Consumer Data Industry Association welcomed the decision, emphasizing that medical debt provides valuable credit risk information.
• CFPB Response: The CFPB, under new leadership following Trump’s inauguration, ceased defending the rule and offered no comment.

Consumer advocates, however, criticized the ruling as a setback for financial fairness, arguing that medical debt often stems from unexpected emergencies and billing errors, making it an unreliable indicator of creditworthiness. This controversy underscores the ongoing debate over how medical debt should be treated in financial assessments.

The Impact: How the Reversal Affects Americans

The decision to reinstate medical debt on credit reports could have far-reaching consequences for millions of Americans. According to the Peterson-KFF Health System Tracker, approximately 20 million adults in the U.S. owe at least $220 billion in medical debt, with 14 million owing over $1,000 and 3 million owing more than $10,000. The South, particularly states like South Dakota (17.7%) and Mississippi (15.2%), has the highest rates of medical debt. The ruling’s impact includes:

• Lower Credit Scores: Unpaid medical debts sent to collections can now appear on credit reports, potentially reducing credit scores and limiting access to loans, mortgages, and rentals.
• Disproportionate Effects: Low-income communities and regions with majority Black or Hispanic populations are more likely to be affected, exacerbating financial inequities.
• Increased Financial Stress: Studies show that medical debt leads to reduced spending on necessities, depleted savings, and additional borrowing, compounding economic challenges.

• Total Medical Debt: $220 billion owed by 20 million adults
• Affected by Ruling: 15 million Americans with $49 billion in medical debt
• High-Debt States: South Dakota (17.7%), Mississippi (15.2%), North Carolina (13.4%)
• Credit Score Impact: Potential 20-point drop for those with reported medical debt

This ruling reverses progress made toward financial relief, placing renewed pressure on individuals to manage medical debt effectively to protect their creditworthiness.

5 Ways to Protect Your Credit Score Amid the Medical Debt Ruling

With medical debt once again impacting credit scores, Americans must take proactive steps to mitigate its effects. Here are five practical strategies to manage medical debt and safeguard your financial future:

1. Review Your Medical Bills for Accuracy

• Check for Errors: Carefully examine medical bills for incorrect charges or services not received.
• Verify Insurance: Ensure your insurance provider has processed claims correctly to avoid overbilling.
• Act Quickly: Contact your healthcare provider immediately to dispute errors, as unresolved issues may lead to collections.

2. Negotiate Payment Plans with Providers

• Explore Financial Assistance: Many hospitals offer charity care or discounts for uninsured or low-income patients.
• Request Payment Plans: Arrange affordable monthly payments to prevent debts from being sent to collections.
• Communicate Proactively: Open dialogue with providers can lead to flexible solutions tailored to your budget.

3. Pay Bills Promptly to Avoid Collections

• Timely Payments: Paying medical bills on time prevents them from being reported to credit bureaus.
• Partial Payments: If unable to pay in full, make regular partial payments to show good faith.
• Negotiate Settlements: Some providers may accept a reduced lump-sum payment to clear the debt.

4. Monitor Your Credit Reports Regularly

• Access Free Reports: Use AnnualCreditReport.com to check your credit reports from Equifax, Experian, and TransUnion.
• Identify Medical Debt: Look for any reported medical debt and verify its accuracy.
• Dispute Errors: File disputes with credit bureaus to correct inaccurate or outdated medical debt entries.

5. Seek Professional Financial Guidance

• Consult Credit Counselors: Nonprofit credit counseling agencies can offer strategies for managing debt.
• Explore Debt Relief Options: In extreme cases, consider debt consolidation or, as a last resort, bankruptcy.
• Stay Informed: Work with financial advisors to understand your rights under laws like the No Surprises Act.

Conclusion: Take Control of Your Financial Future

The decision by a federal judge to reverse medical debt relief marks a significant shift in how medical debt affects credit scores in the U.S. With an estimated 15 million Americans now facing the reinstatement of $49 billion in medical debt on their credit reports, proactive financial management is more critical than ever. By reviewing bills, negotiating with providers, paying promptly, monitoring credit reports, and seeking professional help, you can protect your financial stability. Share your experiences or questions in the comments below to join the conversation and stay informed about future policy changes.

FAQ: Understanding the Medical Debt Ruling

Below are answers to common questions about the federal judge reverses medical debt ruling, optimized for clarity and searchability.

What is medical debt?

Medical debt refers to unpaid bills for healthcare services, such as hospital stays, doctor visits, or medical procedures, often resulting from high deductibles or unexpected costs.

How does medical debt affect my credit score?

Unpaid medical debt sent to collections can appear on your credit report, potentially lowering your credit score and affecting your ability to secure loans or housing.

What was the Biden-era medical debt rule?

Implemented in January 2025, the rule removed medical debt from credit reports, aiming to improve credit scores for 15 million Americans and facilitate loan approvals.

Why did the federal judge reverse the medical debt rule?

Judge Sean Jordan ruled that the CFPB lacked authority under the Fair Credit Reporting Act to exclude medical debt from credit reports, following challenges from the Trump administration and industry groups.

What can I do to manage medical debt after the ruling?

Review bills for errors, negotiate payment plans, monitor your credit reports, and seek professional financial advice to minimize the impact on your credit score.

For additional resources, visit the Consumer Financial Protection Bureau or explore KFF’s Health Care Debt Survey.

Sources:
- Reuters: US Judge Grants Trump Admin Request to Scrap Biden-Era Medical Debt Rule
- Peterson-KFF Health System Tracker: The Burden of Medical Debt in the United States
- CFPB: Medical Bills on Credit Reports