A challenge to the CFPB’s final medical debt rule has been filed by the Cornerstone Credit Union League and Consumer Data Industry Association. The CFPB finalized the rule Tuesday, and the two organizations filed their challenge in the U.S. District Court for the Eastern District of Texas later that same day.

The final rule prohibits creditors from using medical debt information in credit eligibility determinations and consumer reporting agencies from including medical debt in reports to creditors making credit determinations. It is scheduled to become effective 60 days after publication in the Federal Register.

The Cornerstone League claims the final rule exceeds the CFPB’s authority under the Fair Credit Reporting Act and ignores the legislative history of medical debts. 

America’s Credit Unions previously requested the CFPB issue guidance instead of a rulemaking, as credit unions need accurate, complete information when making lending decisions.

The rule will also have a “seismic negative impact on borrowers looking to buy a home, start a small business, or pay for higher education,” America’s Credit Unions Vice President of Policy Engagement and Credit Union Operations Ann Petros wrote in July in CUInsight.