New Colorado law prohibits medical debt from being included on credit reports

PUEBLO, Colo. (KRDO)-- Coloradans no longer need to worry about medical debt impacting their credit score.

In the past, when someone could not afford a medical expense, the bill was sent to collections where that information was shared with consumer reporting agencies that generate credit scores. According to the Colorado Center of Law and Policy, those unpaid medical expenses were damaging people's credit scores and making it harder to buy a house or qualify for a home.

The Center of Law and Policy said one in eight Coloradans have medical debt in collections and the burden is especially acute among marginalized communities.

"Medical debt is really not a good predictor of your creditworthiness. It's a predictor of whether you got sick and had a medical bill that you weren't able to pay," said Julia Char Gilbert, Colorado Center of Law and Policy.

Now, this new law that went into effect Aug. 7 removes those barriers and stops medical debt from being included on credit reports and factored into credit scores in Colorado.

This legislation makes Colorado the first state in the country to enact legislation barring all medical debt from being included on credit reports. 

The legislation will remain in effect until July 1, 2028, unless the legislature takes action to renew it.