YAKIMA, WA — As of June, insurance companies cannot use credit scores to determine home or auto policies or rates. The credit score ban aims to level the playing field by ensuring that everyone pays the same price, regardless of their credit score.
High credit rating holders pay up to 80% Following while low credit rating holders pay close to 30% less than before.
Those 70 and older pay the most, said Independent Insurance Agents and Brokers of Washington, Executive Vice President Dan Holst.
“It frustrates people with good credit because they feel like they’ve worked hard to pay bills on time and keep their credit score high,” Holst said.
The OCI has a public hearing on the ban this morning. If the ban passes, insurance companies will not be able to use credit scores for the next three years.
“It didn’t seem necessary to do it that way so quickly, so abruptly,” Holst said.
For 20 years, credit scores have been used to determine insurance policies and rates. Holst said they are a good indicator for high and low responsibility people.
Now, insurance agents and brokers use general information. Including age, gender, education, type of car and/or driving history to determine prices.
State Farm and Progressive are also seeing price changes, Holst said. He said people could lose their loyalty benefits if they switch agencies.
“I don’t think people really need to worry about one more thing,” Holst said.
Holst said he expects state lawsuits, but the ban will likely pass anyway.