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Insurance Coverage and Your Credit Score

By Deverie Robinson

Everyone needs insurance. Unfortunately, some insurance companies are working to make it difficult, or more accurately, very expensive, for many people to obtain much needed coverage. Lately, an increasing number of people are being charged much higher rates and even denied coverage based on their credit score. That's right-not driving record-credit score. Through the Federal Fair Credit Reporting Act and Washington State's 1993 Fair Credit Reporting Act, insurance companies are allowed to obtain and use credit information in their underwriting practices.

In a recent WashPIRG (Washington Public Interest Research Group) press release, Executive Director Robert Pregulman stated, "Government agencies, legislatures and consumer groups across the country are investigating widespread consumer complaints about the growing insurance company practice of denying or non-renewing insurance on the basis of credit scores, especially because credit scores can also be affected by errors or identity theft, which a consumer cannot control."

In fact, elected officials have gone so far as to recommend House Bill 2763, which "Provides that a person's credit history or insurance score shall not be a factor considered by an insurer in any decision to underwrite, deny, cancel, or refuse to renew a policy of personal insurance."

Mike Kreidler, Washington Insurance Commissioner, also stated in a recent press release that, "Just as the month you were born should not be factored into whether you get insurance, neither should the number of credit inquiries you have or the total available line of credit you carry."

Until this issue is settled, the best thing you can do for yourself is to check your credit reports for any errors or negative information. The law requires that the credit bureau explain your report to you. If you find mistakes, notify the credit bureau, and be specific. They are then required to reinvestigate at no cost. If you find that credit companies are not cooperating, you can send your complaints to the Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580.

For a copy of your credit report, either at low or no cost, contact:

Trans Union: 800-888-4213 or http://www.transunion.com
Equifax Inc.: 800-997 2493 or http://www.equifax.com
Experian, Inc.: 888-397 3742 or http://www.experian.com