Spokane7
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January 21, 2010 in City
Credit score ban faces tough road
Insurers not keen on commissioner’s proposal
OLYMPIA – A credit score should not be used to help determine how much a person pays for home or auto insurance premiums, State Insurance Commissioner Mike Kreidler told a legislative panel Wednesday evening.
Factors that affect credit scores can discriminate against low-income and minority populations, Kreidler said as he lobbied for one of his top priorities: to ban the practice in Washington state.
“Responsible people get laid off. They consolidate their debt. They shouldn’t have to pay more for insurance because of that,” Kreidler said.
But representatives of the insurance industry told the House Financial Institutions and Insurance Committee that a credit score does help predict good and bad insurance risks and should remain one of many factors the companies can use to set a customer’s rates.
“It’s not magic or voodoo; it’s science,” said Kenton Brine, a representative of the Property Casualty Insurers Association. “It’s actuarially sound.”
Nearly all states allow the use of credit scores, said Alex Hageli, another representative of the association. There are different theories as to why that is, but no definitive answer. The law doesn’t require companies to explain why credit scores work; they just have to be predictive.
People with good or average credit scores either save money or aren’t affected by putting that into the mix of factors, Robert Detlefsen, a researcher for the insurance industry, said: “There is no way you can use a credit score to identify a person on the basis of race or ethnicity.”
Washington state started allowing the use of credit scores 10 years ago and tried to stop it in 2002, Kreidler said. Instead, the state compromised with some restrictions that he says aren’t working. He wants the practice banned and insurance companies to use factors like driving records and accidents for auto insurance or number of claims for homeowners insurance.
“I’m not talking predictability; I’m talking fairness,” he said.
Similar bans have been proposed the last two years but have stalled in the Legislature.
Romney/Paul split weighing on county GOP 
lewis8457 on January 21 at 10:07 a.m.
Needing credit in the country is the biggest scam going. Everyone is supposed to have good credit. I learned the lesson many years ago. Pay with cash if you can’t afford it do not buy it.
Credit reports are used against you for many things such as getting a job. It is a catch 22. If person gets laid off, they get behind in their bills, credit rating drops. They finally get a job interview but they don’t get the job because their credit is no good.
I would bet a lot of the unemployed that have suffered a home repo would have difficulty getting a job simply because of their credit rating. Once again the little guy takes it in the shorts while the fed sucks on their golden spoon.
Pat O'Leary on January 21 at 1:33 p.m.
God forbid that anything is ever done to help the average citizen. The US Congress and the Washington State legislature only care for the lobbyists. I’ve been a Democrat all my life, but I am reaching the point that I don’t know who to vote for……but I can guarantee this ….. it will never be a Republican, but it might not be a Democrat either.
dukkandpooh on January 21 at 3:58 p.m.
I’m totally with you, Pat OLeary. Would love to see them all out on their arses and start from scratch.
D Statler on January 28 at 7:31 p.m.
The police and prosecutors in Spokane target people with low to no credit on purpose.They can not afford good attourneys to defend themselves. They tend to leave the rich people alone so they don’t have to hire any real prosecutors.LOL Just look back into the Met Mortgage debacle and notice that no criminal charges were filed.You can also look how charges are never filed when our drunken police officers get into trouble.Our Prosecutors office can’t compete with the lawyers retained by the police guild. They sure do go after people who rely on the public defenders office tho.OOOOPS! I forgot,the prosecutors office and the public defenders office are one of the same.Maybe we should run credit checks on all of our public employees and fire anybody with a 600 or less.LOL I AM HAVING WAY TOO MUCH FUN HERE !!
special thanks to our public employees that do things the right way………..shame on the rest of you!
D Statler on January 28 at 7:34 p.m.
I forgot, INSURANCE ? WHO NEEDS INSURANCE ? everybody else has uninsured motorist insurance don’t they ?
flojoflojo on March 01 at 12:00 p.m.
Why do people think that credit score is a protected class. Or that income is the same as credit score. It’s not.
Insurers wouldn’t want to use credit scores if there wasn’t a significant correlation with low scores and losses. Does credit score sometimes get it wrong? Of course. But insurance companies have an incentive to try to identify those that would be a good underwriting risk but may have a lower credit score. All insurance companies use proprietary models to try to identify these people and increase their market share and profit.
What we don’t need is more government intervention, telling insurance companies how to operate and reducing competition. That raises rates for everyone.
http://www.pacificnorthwestcoastbias.com/should-insures-use-credit-scores/