Federal judge reverses a CFPB rule to strip medical debt from credit reports. Here's what it means.

A federal judge has blocked a rule issued by the Consumer Financial Protection Bureau in January that would have removed unpaid medical debt from the credit reports of about 15 million consumers. 

The ruling, issued Friday by Judge Sean Jordan of the U.S. District Court of Texas' Eastern District, orders that the rule be vacated because of the court's finding that the CFPB exceeded its authority under the Fair Credit Reporting Act. After the CFPB issued the rule in January, the Cornerstone Credit Union League and the Consumer Data Industry Association, a trade group for the credit reporting industry, had filed a lawsuit to halt it.

The court's decision could impact the roughly 15 million people who carry about $49 billion in medical debt on their credit reports, a burden that can influence whether lenders decide whether to extend loans like mortgages or auto loans to consumers. At the time when the CFPB issued the rule, the agency noted that medical debt is a poor predictor of whether a consumer will make good on other types of loans.