On Friday, July 11, 2025, the United States District Court for the Eastern District of Texas held that the CFPB exceeded its authority when it issued a rule under the Fair Credit Reporting Act (“FCRA”) that would have prohibited medical debt from appearing on credit reports, and would have prohibited creditors from using information about medical debt when making credit decisions.

The court vacated the rule in full.

  • The Court explicitly stated that “FCRA authorizes CRAs to include information about a consumer’s medical debts in consumer credit reports when properly coded to conceal the name of the provider and the nature of the services provided. It also permits creditors to use that information to determine a consumer’s credit eligibility.”
    • FCRA “allows CRAs to furnish information about medical debt if that information is reported in a way that does not identify the provider of the services or expose the underlying medical condition.”
      • This authorization is not dependent on the Bureau first passing a rule allowing creditors to use medical debt information in credit transactions.
      • When Congress wants to flatly prohibit certain medical debt information from appearing on consumer credit reports, it says so directly.
    • FCRA also “permits [creditors] to use medical-debt information for credit decisions if the information is coded.”
      • The rule was set aside because it conflicted with this statutory provision; the Bureau is “powerless to promulgate such a rule that flouts a federal statute by functionally rewriting it.”
      • Like the authorization for CRAs, this authorization for creditors is not dependent on the Bureau first passing a regulation. “Congress could have written a statute that allowed creditors to conditionally use coded medical debt.  It didn’t.”
    • The court found that the CFPB has “no authority to limit the contents of consumer credit reports based on state and other law.”
      • The Court also held that FCRA’s “permissible purpose” requirement does not impose a duty on consumer credit reporting agencies (“CRAs”) to ensure that recipients of credit reports can use all of the information included in a credit report. Rather, CRAs just have to confirm that the recipient has a permissible purpose to use the report generally.
        • “Congress imposed only one relevant statutory limit on such furnishing: a CRA must have ‘reasonable grounds for believing that the consumer report’ will be used for ‘a purpose listed in section 1681b of this title.’”
        • The Bureau does not have authority “to define what in a consumer credit report is ‘permissible.’ Congress has defined the permissible purposes of a consumer report . . . .”
        • Creditors have a permissible purpose for a consumer credit report as a whole even if a state law purports to prohibit consideration of medical debt.
      • And, “just as an agency cannot prohibit what a federal statute explicitly permits, neither can a state law. Accordingly, any state law purporting to prohibit a CRA from furnishing a credit report with coded medical information would be inconsistent with FCRA and therefore preempted.”
    • Because the Bureau’s rule would prohibit that which the statute allows, it was unlawful and therefore enjoined.