New York

Consumer advocates press New York lawmakers to ban use of credit scores in setting auto insurance rates

NEW YORK — There’s a push for New York to ban the use of credit scores as a factor in setting auto insurance premiums in the state.

Critics say the practice penalizes safe drivers simply because their credit is less than perfect. But the industry is pushing back, CBS2’s Tony Aiello reported Friday.

Consumer advocates say millions of New York drivers pay more for auto insurance because of less-than-excellent credit.

Yonkers resident Rosa Mendez says she’s one of them.

“I think it’s ridiculous. That just happened to me, actually, in March. I could not find a policy because of my credit,” Mendez said.

Credit scores range from bad to fair, good to excellent. It’s widely known they impact your interest rates. It’s less understood that insurance companies use them to calculate auto premiums.

“This practice disproportionately hurts low and moderate income customers, and it hurts drivers of color,” said Chuck Bell of Consumer Reports.

Bell told a state committee the insurance industry penalizes drivers by factoring in credit scores.

Data from 2020 shows a driver with a clean record, but only fair credit, pays $476 more per year for basic liability coverage than a driver with excellent credit.

“Most consumers believe their rates should be based on how they actually drive and handle themselves on the roads,” Bell said.

The industry pushed back at the hearing, saying the credit score is one factor in a “credit based insurance score” that helps gauge responsibility and calculate risk.

“As many factors as they can use to determine what is most accurate, the better off they will be and the more accurate they’ll be. So removing any of these factors will make the end product less accurate,” said Rory Whelan, an insurance industry spokesperson.

The industry is influential in Albany and Trenton. Proposals to ban the use of credit scores in auto rate setting have been stuck in neutral in both state capitals.

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