Your Credit Score Is Setting Your Car Insurance Rate — Lawmakers Want to Stop That

by | Apr 27, 2026 | General

State lawmakers are moving to block insurers from using credit history to set premiums, reigniting a broader national debate over how credit scores shape the financial lives of consumers.

Bills pending in Iowa, New York, Oklahoma and Pennsylvania would prohibit insurers from using credit-based insurance scores to determine homeowners or auto insurance costs, CNBC reported. Currently, only California, Hawaii and Massachusetts ban the practice for auto coverage, while California, Massachusetts and Maryland restrict its use for homeowners policies.


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Michael DeLong, research and advocacy associate at the Consumer Federation of America, told CNBC the practice was “extremely unfair,” noting it penalizes consumers regardless of their actual driving record or risk profile.

Research supports the concern. Homeowners with low credit scores pay 24% more than high-score peers for identical coverage, according to the National Bureau of Economic Research. Drivers with poor credit pay 69% more on average than those with good credit.In some cases, poor credit can push premiums higher than a recent DUI conviction would, NerdWallet found.

The insurance industry defends the tool. Bob Passmore of the American Property Casualty Insurance Association told CNBC that eliminating credit-based scores would make pricing less accurate and remove savings for many consumers.

Mortgage Market Joins The Shift

The credit-scoring debate is also reshaping mortgage markets. Freddie Mac (OTC:FMCC) and Fannie Mae (OTC:FNMA) announced acceptance of mortgages evaluated using VantageScore 4.0, co-owned by Equifax (NYSE:EFX), Experian (OTC:EXPGF) and TransUnion (NYSE:TRU).

Deeper Concerns in Insurance

Iowa Insurance Commissioner Doug Ommen separately warned that private equity-backed firms, including Apollo Global Management (NYSE:APO), KKR & Co. (NYSE:KKR) and Blackstone (NYSE:BX), have redirected insurance premiums into riskier private market investments, raising transparency concerns for policyholders.

DeLong warned that credit-based insurance scores make insurance “expensive or unaffordable for a lot of people.”

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.


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