Bills have been introduced in several states that would ban insurers from using credit-based insurance scores to set premiums.
Pending legislation in Iowa, New York, Oklahoma and Pennsylvania would prohibit carriers from setting rates based on a policyholder's credit history for either auto or home insurance policies, or both.
Several states have already considered bans, but only a few have successfully passed legislation. Hawaii prohibits the use of credit history in auto insurance coverage decisions, and Maryland bans it for home insurance. California and Massachusetts have prohibitions in place for both auto and home insurance. In most states, insurers aren't allowed to use credit-based insurance scores as the sole reason for rate increases or to deny, cancel or refuse to renew a policy.
A low credit-based insurance score can often result in higher premiums. According to a report from the National Bureau of Economic Research, homeowners with low scores pay about 24% more than homeowners with higher scores for the same coverage. For drivers with poor credit, rates are 69% higher on average than for those with good credit, according to NerdWallet.
The slideshow above highlights cities with the lowest average credit scores according to WalletHub.
Photo credit: Andrey Popov/Adobe Stock
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