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

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NEW YORK — There is pressure 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 are paying more for car insurance because of less than excellent credit.

Yonkers resident Rosa Mendez says she is one of them.

“I think it’s ridiculous. It happened to me, actually, in March. I couldn’t find police because of my credit,” Mendez said.

Credit ratings range from poor to fair, good to excellent. It is well known that they have an impact on your interest rates. It is less understood that insurance companies use them to calculate car premiums.

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

Bell told a state committee that the insurance industry penalizes drivers based on credit scores.

Data from 2020 shows that 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 think their rates should be based on how they actually drive and behave on the roads,” Bell said.

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

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

The industry is influential in Albany and Trenton. Proposals to ban the use of credit ratings in automatic rate setting remained neutral in both state capitals.

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