Put end to insurers’ use of credit scoring
and state Rep. Mark Larson
Imagine you are a homeowner and you pay your mortgage on time every month, because you want to be diligent. But other bills might not be so lucky and not paid on time. If late by over 30 days, these bills may appear on your credit report as late payments which negatively impacts your credit score.
Insurance companies are now using these credit scores to determine how much to charge for home, health and auto insurance ” regardless of your driving record or health condition or other factors that may legitimately be used to determine insurance rates.
Logic would suggest that if you pay your insurance bill on time then you should be insured without a needless reference to credit scores. Truth be told, insurance companies use credit scores to charge more and make more money.
The insurance industry’s use of credit scores for underwriting is basically a backdoor way of using credit information to determine consumers’ rates.
Credit scoring is a tool used by insurance companies to simplify all the information on a consumer’s credit report into a single numerical score. That score is a snapshot of a consumer’s credit information at a given moment in time.
Credit scoring is an unfair method to determine what the person will pay for their insurance. A consumer’s credit score can vary widely depending on such random factors as which of the three major credit bureaus was used to compute the score, and whether the customer recently refinanced a mortgage or switched credit cards to get a lower rate.
In addition, credit reports are riddled with errors and consumers face significant problems getting credit bureaus to remove inaccurate information.
We are committed to putting an end to one of the most blatantly anti-consumer practices that we have seen within this or any industry. Credit scoring has forced a disproportionate number of consumers to pay higher premiums. We have yet to hear a reasonable argument on how they can justify equating an individual’s credit with a propensity for a higher claims filing in homeowners insurance.
The state needs to protect constituents from arbitrary and unfair practices of insurance companies. Without this new law, insurers will continue to do what they want, not what is fair to Coloradans. We urge Gov. Owens to sign HB-1292, a bipartisan bill that at least 93 legislators have voted for.
This bill is supported by a wide variety of groups, including the Colorado Association of Homebuilders and CoPIRG (Colorado Public Interest Research Group). Call Gov. Owens at 303-866-2471 and ask him to sign HB 1292 and prohibit credit scoring.
” Sen. Bob Hagedorn, D-Aurora, represents Aurora and Arapahoe County, Sen. Jim Dyer, R-Littleton, represents Arapahoe and Jefferson counties, and Rep. Mark Larson, R-Cortez, represents Archuleta, La Plata, Montezuma and San Juan counties.
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