Preheat the oven to 375°F (190°C).
In a mixing bowl, combine olive oil, chili powder, cumin, garlic powder, onion powder, paprika, salt, and pepper. Mix well to create a marinade.
Add the chicken breasts to the bowl, coating them thoroughly with the marinade. Allow them to marinate for at least 10 minutes.
In a skillet over medium heat, sauté the sliced bell peppers for about 5 minutes until they are slightly softened. Remove from heat and set aside.
In a baking dish, place the marinated chicken breasts. Distribute the sautéed peppers evenly on top.
Sprinkle the shredded cheddar cheese generously over the chicken and peppers.
Cover the baking dish with aluminum foil and bake in the preheated oven for 25 minutes.
After 25 minutes, remove the foil and bake for an additional 5-10 minutes, or until the cheese is bubbly and golden brown, and the chicken reaches an internal temperature of 165°F (74°C).
Remove from the oven and let it rest for 5 minutes. Garnish with fresh cilantro if desired. Serve hot.