State challenges use of credit scores

State challenges use of credit scores

There are 72 comments on the WOOD-TV Grand Rapids and Michigan story from Apr 10, 2009, titled State challenges use of credit scores. In it, WOOD-TV Grand Rapids and Michigan reports that:

In the state's push to challenge insurance companies' use of credit scores to determine premiums, there was a setback.

Join the discussion below, or Read more at WOOD-TV Grand Rapids and Michigan.

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Since: Feb 09

nowhere

#1 Apr 10, 2009
yea i think credit scores should be nullified unless you are getting a loan obviously. i mean people who had good credit once and lost their jobs i mean what bill are you going to try and pay first, obviously food then shelter then whatever else
Craig

Liverpool, NY

#2 Apr 11, 2009
Credit scores can reveal a great deal about a person. They are an excellent means to determine a person's level of responsibility and the degree of risk that an insurance company, bank or landlord might assume in dealing with that person. The state has no good reason to protect people with lousy credit and should stay out of it.
Chuck

Big Rapids, MI

#3 Apr 11, 2009
Credit information is personal and confidential. It should NOT be used for anything other then assessing risk in extending credit. Period! A persons ability to pay a bill has nothing to do with their driving. Yet another example of Big Business using whatever means they can as a smoke screen to charge more. What business is it of a circuit court to interfere? Any one care to take a look at campaign contributions?

Since: Jan 09

Hersey, Michigan

#4 Apr 11, 2009
There's no difference between the insurance companies using credit scores to determine auto insurance premiums than mortgage companies redlining entire neighborhoods because the people may be of a class that's not up to their standards. The bottom line is that those who can least afford it pay the most. It's not right and should be outlawed. The insurance companies already use demographics to determine rates and that should be all they use.
Missi

Granbury, TX

#5 Apr 11, 2009
Craig wrote:
Credit scores can reveal a great deal about a person. They are an excellent means to determine a person's level of responsibility and the degree of risk that an insurance company, bank or landlord might assume in dealing with that person. The state has no good reason to protect people with lousy credit and should stay out of it.
My credit score is less than perfect. I have never been in an accident, never had a ticket, and yet I am supposed to pay a higher hate because I haven't always paid my bills on time? That doesn't make sense to me. Credit scores don't show WHY I was late on this bill or that. They don't show that my husband has been on and off of work because he's been sick. It doesn't show that I was laid off and have been unable to find work. It doesn't show that November thru April my enery bills are WAY too high and I have to sometimes make a choice between having heat or paying that credit card bill. I think that making the choice between my kids having food on the table or paying on PAST credit blunders is pretty responsible. 5 years ago We may have made poor credit decisions and gotten into a mess that we have to pay for...but that doesn't mean that I should have to pay more for everything else in the process.
JMK

Normal, IL

#6 Apr 11, 2009
Chuck wrote:
Credit information is personal and confidential. It should NOT be used for anything other then assessing risk in extending credit. Period! A persons ability to pay a bill has nothing to do with their driving. Yet another example of Big Business using whatever means they can as a smoke screen to charge more. What business is it of a circuit court to interfere? Any one care to take a look at campaign contributions?
Credit information is personal and confidential. It is also an excellent measure of risk, both financial and otherwise. People who are responsible with credit can be statistically proven to be safer drivers - or at a minimum, drivers with less claims. Correlation between credit score and probability of claims has been proven. Is it perfect? No. Are there responsible drivers with bad credit? Sure. But insurance is about finding the personal attributes that best predict potential claim payouts.

“love, loyalty, friendship”

Since: Sep 08

Dutchville

#7 Apr 11, 2009
A few years ago judging people by their credit scores was more appropriate, these days it's not really an accurate measuring tool.

People come into my office with messed up credit from foreclosures and inability to pay bills from job loss frequently. I do not hold that against them.

Insurance companies are billion dollar corporations- using credit scores to create premium amounts is just another way to make more money for them.
pjdutchville

United States

#8 Apr 11, 2009
Gee, even the financial "God" Dave Ramsey says that a FICO score is the most ridiculous and useless number that a person can have.
mwal

Grand Rapids, MI

#9 Apr 11, 2009
In times like we are seeing now, even typically responsible people are being seriously impacted by our lousy econonmy. Problems catch them thru no major fault of their own. To use the insurance companies criteria to charge them more seems excessive and abusive. Some of our people need help not more harm.
sse

Grand Rapids, MI

#10 Apr 11, 2009
I have an excellant credit score. Bank of America just raised my finance charge. I've never been late. Always paid more than what was due. Could it be that all of those credit cards that BOA issued to illegal & legal Mexican immigrants is coming back to haunt them? Could it be that those illegals & legals went on a spending splurge and then went back across the border, scott-free?
Something to think about.

Since: Mar 09

United States

#11 Apr 11, 2009
Craig wrote:
Credit scores can reveal a great deal about a person. They are an excellent means to determine a person's level of responsibility and the degree of risk that an insurance company, bank or landlord might assume in dealing with that person. The state has no good reason to protect people with lousy credit and should stay out of it.
What about for people like me who refuse to use credit?Seriously-I haven't bought anything on credit in over 10 years and I always pay upfront for 6 months of insurance at a time.I should pay more because I don't use credit?That's ridiculous.Car insurance should be based solely on a person's driving record,nothing else.
Steve

Spring Lake, MI

#12 Apr 11, 2009
I would say the judge has great credit. I live in Barry county and have only heard bad things about most of Barry County judges. lets not help the little guy.
Steve

Spring Lake, MI

#13 Apr 11, 2009
Craig wrote:
Credit scores can reveal a great deal about a person. They are an excellent means to determine a person's level of responsibility and the degree of risk that an insurance company, bank or landlord might assume in dealing with that person. The state has no good reason to protect people with lousy credit and should stay out of it.
I don't have good credit because of a lay off two years ago, but never filled 11, and caught up on my bills and am doing good. How can having bad creit say you will get into a car wreck? So because I could not pay my bills I should pay more for INS.? that is so stupid. Never had a speeding ticket or car wreck in the 20 years I have been driving but since my credit is not good I pay more.

Since: Feb 09

nowhere

#14 Apr 11, 2009
JMK wrote:
<quoted text>
People who are responsible with credit can be statistically proven to be safer drivers - or at a minimum, drivers with less claims. Correlation between credit score and probability of claims has been proven. Is it perfect? No. Are there responsible drivers with bad credit? Sure. But insurance is about finding the personal attributes that best predict potential claim payouts.
i don't think its right to single out people based on credit, why not look at their driving record instead, my credit is like 450 but i have never gotten a ticket or been in an accident. but yet i pay 200 a month for insurance??
dale

Madison, WI

#15 Apr 11, 2009
Craig wrote:
Credit scores can reveal a great deal about a person. They are an excellent means to determine a person's level of responsibility and the degree of risk that an insurance company, bank or landlord might assume in dealing with that person. The state has no good reason to protect people with lousy credit and should stay out of it.
It's stupid people like you that are responsible for this mess we're in. What are you?? Related to Barney Frank.

Since: Jul 08

Kentwood MI

#16 Apr 11, 2009
It seems that Craig and JMK (Just Marry Kinfolk?) have struck a nerve here. Could it be that they ae right? Nah. In the insurance industry we can't discriminate between genders even though we know one is less apt to cost us money. We can't discriminate between cultures or ethnic origins even though we have figures that prove that some are more apt to cost us than others. Age? Don't even go there. So please people, don't take away the only means we have left to rip peoples heads off. We have major conventions and trips that must be paid for.
LC
Big MF

Snohomish, WA

#17 Apr 11, 2009
pjdutchville wrote:
Gee, even the financial "God" Dave Ramsey says that a FICO score is the most ridiculous and useless number that a person can have.
FICO scores are for lazy companies who don't want to do any research to really find out what kind of risk you are.
Walter

Deerfield, IL

#18 Apr 11, 2009
Using credit/insurance scoring has been a proven model to predict risk for insurance companies. Even though it's not an exact measure of one's risk, just like one's driving record, the proof is in the numbers. You cannot argue the facts that prove people with lower credit scores have a higher loss ratios. It's no different than comparing a teenage driver to an adult. If they have more claims, they deserve a higher premium. There are always going to be some teenage drivers that don't have claims, just like there are going to be some lower credit score people that don't have claims, but when lower credit score poeple have loss ratios that are 30% worse than people with excellent credit scores, the solution is pretty obvious. Insurance companies have decades of numbers that support these facts, and in my opinion the Governor has no business interfering with this concept. After all, OFIS must approve insurance companies rating structures before they can be implemented, and the governor is one who appoints the insurance commissioner in charge of OFIS. The fight against credit scoring appears to be just another political ploy by the governor, just like Englers decision to give an MCCA rebate a few years back.

The ignorance of the general public about this topic is baffling. There are plenty of insurance carriers out there that will offer competative premiums to people with mediocre credit assuming they have a good claim history. If people would learn to build a relationship with their insurance agent, they might become more educated on how all of this works.

Finally, I don't think people realize how many drivers will actually pay higher premiums if credit scoring gets banned. Banning credit scoring is only going to benefit the people with extremely poor credit. All of the people with average to excellent credit will only pay higher premiums if this goes away. So be cautios about what you wish for.
JMK

Bloomington, IL

#19 Apr 11, 2009
Lamont Cranston wrote:
It seems that Craig and JMK (Just Marry Kinfolk?) have struck a nerve here. Could it be that they ae right? Nah. In the insurance industry we can't discriminate between genders even though we know one is less apt to cost us money. We can't discriminate between cultures or ethnic origins even though we have figures that prove that some are more apt to cost us than others. Age? Don't even go there. So please people, don't take away the only means we have left to rip peoples heads off. We have major conventions and trips that must be paid for.
LC
Look at it like this LC (I won't stoop to your adolescence). As a late 20-something male, I was charged high rates for many years because I was "male" and "single" and drove a "sports car". I fell into high-risk groups of drivers. None of those things say anything about me individually (or how I personally drive), they just said that people who were similar to me were more costly to insure.

I love that insurance companies use credit scores because it is something that I CONTROL. It's personal to me - I'm not judged (as much) for people who fall into similar demographics as me. Why wouldn't people prefer to be judged based on something individual to them instead of their demographic group?

Granted, there are some people (like my parents) who get the shaft with this system. The only credit they ever used was to purchase a home. Their credit score wasn't great because they had so little history/credit usage. Situations like that are something insurance companies should take into consideration... and I'm sure there are other situations as well.
pleas

Grand Rapids, MI

#20 Apr 11, 2009
All insurance needs to be kept in state.

I think all this total BS ame from people getting insurance from out of state, instant approval over the internet ordering.

It is not about how one drives or the car they drive.

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