Colorado Bans Most Medical Debt From Credit Reports

Case: House Bill 23-1126
Source: Colorado General Assembly
Citation: H.B. 23-1126, 2023 Colo. Sess. Laws ch. 374 (amending Colo. Rev. Stat. §§ 5-16-105, 5-16-107, 5-18-103, 5-18-109)
Decided: June 5, 2023
Bottom line: Coloradans can dispute medical debt that appears on a credit report used for most credit decisions, though an industry lawsuit argues federal law preempts the ban.

Background

Medical debt often reflects illness, injury, or insurance billing problems rather than a person’s willingness to pay. In 2022 and 2023, Equifax, Experian, and TransUnion voluntarily stopped reporting paid medical collections and medical collections under $500, but larger unpaid medical debts could still appear. Federal law permits medical debt to appear on credit reports when it is coded so it does not reveal the provider or the nature of the care. 15 U.S.C. § 1681b(g).

Colorado has its own consumer credit reporting statute, which lists items a bureau may not include in a consumer report, such as most adverse information more than seven years old. In 2023, the General Assembly added medical debt to that list.

What the rule does

Governor Jared Polis signed House Bill 23-1126 on June 5, 2023. It took effect August 7, 2023, and applies to conduct on or after that date. Local news coverage described it as the first law of its kind in the nation.

Bureaus. The law bars a consumer reporting agency from making a consumer report that contains adverse information the agency “knows or should know concerns medical debt.” Colo. Rev. Stat. § 5-18-109(1)(f). Medical debt means debt from health-care services or goods, including devices, durable medical equipment, and prescription drugs. It does not include debt on an ordinary credit card, only cards issued specifically for health-care payments.

The exception. The ban does not apply to a report used for a credit transaction involving a principal amount above the national conforming loan limit for a one-unit property, set each year by the Federal Housing Finance Agency. That generally means large mortgages. The law also removed older exceptions for credit transactions and life insurance of $150,000 or more.

Collectors. Debt collectors may not falsely represent that medical debt will be included in a consumer report or factored into a credit score, subject to the same exception. Their initial written communication must state that “Colorado law prohibits credit bureaus from reporting medical debt or factoring medical debt into a credit score” except for those larger transactions.

Sunset and study. These provisions are repealed effective July 1, 2028. The Department of Revenue must study the law’s effects on creditworthiness, access to credit, and medical debt burden, including across racial groups and income levels, and report by January 1, 2028.

Later developments. In October 2025, the CFPB issued an interpretive rule taking the position that the FCRA preempts state laws barring categories of information such as medical debt from credit reports. In November 2025, ACA International, a collection industry trade group, and a member company sued Colorado’s credit code administrator in federal court in Colorado, arguing the law is preempted and violates the First Amendment. We have not found a ruling on the merits as of this update. In 2026, a federal court in Texas held a narrower Texas medical debt reporting law preempted.

Our take

The law reflects a reasonable judgment that medical bills are a poor measure of creditworthiness, and the conforming-loan exception tries to accommodate lenders on the largest loans. Critics argue that removing medical debt makes reports less complete and that providers may turn to lawsuits instead. Those are fair debates.

The preemption question is serious. The FCRA preempts state laws on certain subjects, including what may appear on a credit report, and courts have reached different results on state medical debt laws. Until courts resolve the Colorado challenge, the law remains on the books, but consumers should not assume it will survive in its current form, and the debt itself is still owed.

What it means if your report is wrong

If you live in Colorado and see medical collections on your credit report, dispute them in writing with each bureau and cite HB23-1126. Also check for problems that matter under federal law in any state: medical debts that were paid, covered by insurance, under $500, or not yours should not be reported. Keep any collection letter you receive; the Colorado law requires a specific disclosure in the first one.

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Sources

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Commentary we reviewed

Updated November 1, 2026. "Our take" is the firm's opinion. This page is general information, not legal advice, and later decisions may change the law.