Overview
- An interpretive rule signed by acting CFPB head Russell Vought asserts the Fair Credit Reporting Act preempts state laws that bar medical debt from consumer credit files.
- The guidance does not immediately nullify existing state statutes, but it is expected to influence lawsuits and discourage new state protections while courts weigh its force.
- The move reverses Biden-era policy, following a July ruling by a Texas federal judge that blocked a nationwide rule projected to scrub $49 billion in medical debt from 15 million Americans’ reports.
- Roughly 100 million people hold about $220 billion in medical debt, with around 15 million showing such debts on credit reports, even after bureaus stopped reporting balances under $500 in 2023.
- Consumer advocates warn the change could restrict access to loans, housing, and jobs, as industry groups push for uniform national standards and recent Supreme Court limits on agency deference leave courts as the final arbiters.