In a controversial move during its final weeks, the Biden administration’s Consumer Financial Protection Bureau (CFPB) finalized a rule Tuesday that will prevent medical debt from appearing on credit reports. The regulation, estimated to impact 15 million Americans and $49 billion in medical debt, also bars creditors from using medical information in lending decisions.
The rule targets major credit-reporting agencies—Equifax, Experian, and TransUnion—prohibiting them from including medical bills in evaluations shared with banks, landlords, and employers. CFPB Director Rohit Chopra defended the policy, stating, “People who get sick shouldn’t have their financial future upended.” He argued that medical debt is often an unreliable predictor of loan repayment and has been used by debt collectors to pressure consumers unfairly.
Critics of the rule, including Equifax and debt collector trade group ACA International, have labeled it as overreach. In an August filing, Equifax argued the rule was “arbitrary and capricious,” claiming it lacked evidence to justify excluding medical debt and undermined Congress’s intent to authorize reporting such debt. ACA International warned the rule would harm lenders by preventing the collection of “rightfully owed” consumer debts.
The CFPB, established in 2011 under the guidance of Sen. Elizabeth Warren (D-MA), has faced criticism for other recent regulatory actions. In December, the agency issued a rule capping overdraft fees at $5 or requiring banks to treat overdrafts as credit. Experts anticipate these measures will face legal challenges, particularly in light of the Supreme Court’s recent decision curbing bureaucratic power under the Chevron deference doctrine.
While the CFPB claims its new rule on medical debt will alleviate financial burdens, opponents argue it could disrupt credit markets, hinder accurate risk assessment, and weaken debt recovery systems. With President-elect Donald Trump’s administration set to take office January 20, regulatory rollbacks are likely to challenge the CFPB’s latest moves.
