In 2013, the Consumer Federation of America published rate comparisons showing that a driver with a clean record and a credit score near 580 could be quoted $1,000 or more per year above a neighbor with the same driving history and a score near 780, according to the organization’s analysis of online quotes from major carriers. That pricing gap has drawn fresh attention from state lawmakers, and the latest effort is in New York, where legislators introduced the Motor Vehicle Insurance Fairness Act during the current session. The bill, filed as S9537 in the state Senate and its Assembly companion A10524, would bar auto insurers from using consumer credit information or credit-based insurance scores when setting rates or making underwriting decisions.
New York’s proposal joins existing bans in California, Michigan, and Massachusetts, along with a contested regulatory effort in Washington state, forming a widening patchwork of restrictions that challenge one of the insurance industry’s most common pricing tools. Several of these legislative pushes also cover homeowners insurance, where credit-based scoring is equally widespread and has prompted parallel consumer complaints.
Where credit-score bans already apply
California was the first major market to wall off credit data from auto insurance pricing. Under regulations enforcing Proposition 103, the state’s insurance commissioner requires that auto rates be based primarily on driving safety record, annual mileage, and years of experience. Credit history is not a permitted rating factor, a rule that has been in place since the late 1980s and covers the nation’s largest auto insurance market.
Michigan’s auto insurance reform, which took effect for policies issued or renewed after July 1, 2020, bars insurers from using credit scores or other non-driving factors when setting rates. The prohibition is codified in Michigan Compiled Laws Section 500.2162 and described in state consumer-protection materials. The restriction makes Michigan one of the most aggressive states in severing the link between a driver’s financial profile and the cost of mandatory coverage.
Massachusetts has maintained a longer-standing bar. Under M.G.L. Chapter 175, Section 94C, insurers cannot use credit information when issuing auto policies. The state also operates a residual-market system through Commonwealth Automobile Reinsurers (CAR), a mechanism that assigns coverage to drivers whom private insurers decline. Regulators there have historically emphasized driving record and years of experience rather than financial characteristics when reviewing rating plans.
The research that shaped the debate
Much of the policy conversation still rests on a 2007 Federal Trade Commission report, “Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance,” produced under a mandate from the Fair and Accurate Credit Transactions Act of 2003. Drawing on a large dataset of insurance policies, public comments, and prior research, the FTC concluded that credit-based scores do predict insurance losses, helping insurers distinguish higher-risk policyholders from lower-risk ones. But the report also flagged fairness concerns, documenting differences in score distributions across racial and ethnic groups that raised questions about disparate impact.
Nearly two decades later, no comparable federal study has been released. That gap matters because credit markets, consumer debt patterns, and insurer pricing technology have all shifted significantly since 2007, leaving policymakers to work from an aging but still frequently cited evidence base.
Homeowners insurance faces the same scrutiny
The credit-score debate is not limited to auto coverage. Homeowners insurance carriers in most states also factor credit-based scores into premiums, and several of the legislative proposals now moving through statehouses target both lines of coverage. Washington state’s regulatory effort, for example, applied to all personal insurance lines, not just auto policies. Consumer groups have argued that the same disparities the FTC documented in auto insurance extend to homeowners coverage, where a low credit score can increase annual premiums by hundreds of dollars even for a homeowner who has never filed a property claim.
Where the fight is still playing out
Washington state’s effort to restrict credit scoring in personal insurance lines remains in legal limbo. The state’s Office of the Insurance Commissioner adopted a rule that would temporarily ban the practice, citing consumer hardship during the pandemic and concerns about disparate impacts. Industry groups, including the National Association of Mutual Insurance Companies and the American Property Casualty Insurance Association, challenged the rule in court, and a judge granted an extended stay blocking enforcement. As of May 2026, no public update from the regulator has confirmed a final resolution, and insurers and policyholders there continue to operate under pre-existing rules.
New York’s bill is still a proposal. As of May 2026, no committee vote or floor schedule has been publicly posted for the current session. Lawmakers could amend the list of prohibited factors, narrow the scope to rating while preserving some underwriting uses, or carve out exceptions for anti-fraud checks.
Industry trade groups have generally argued that banning credit-based factors raises rates for many drivers with strong credit histories, because those drivers currently receive discounts that reflect their statistically lower claims frequency. The Insurance Information Institute has cited insurer data showing that credit-based scores correlate with claim costs independently of other rating variables. Consumer advocates counter that current practices unfairly burden people dealing with medical debt, job loss, or other financial shocks unrelated to driving behavior. Groups like the Consumer Federation of America and the National Consumer Law Center have called credit-based pricing a proxy for racial and economic inequality, pointing to the same disparities the FTC flagged in 2007.
What Congress has not done
Federal lawmakers have not advanced comprehensive legislation on credit-based insurance scores, leaving states to continue experimenting with outright bans, partial limits, or enhanced disclosure requirements. A handful of states beyond those with full bans have adopted softer restrictions, such as requiring insurers to re-run credit checks at renewal so that improving scores benefit consumers, or capping the surcharge that a poor credit score can add to a premium. But there is no uniform national standard, and the absence of a recent federal study means the empirical foundation for the debate has not kept pace with changes in the insurance and credit industries.
Why your ZIP code still matters more than your driving record
For now, drivers’ and homeowners’ experiences differ sharply depending on where they live. In California, Michigan, and Massachusetts, credit information plays no role in auto insurance pricing. In most other states, a missed payment or a dip in a credit score can still translate into a higher bill at renewal, even if the policyholder has never filed a claim. New York’s pending legislation and Washington’s unresolved court fight show that the issue is far from settled. With no federal framework on the horizon and state-level action accelerating, the rules governing who pays what for auto and homeowners insurance are being rewritten one statehouse at a time.
Paul Anderson is a finance writer and editor at The Financial Wire. He has spent seven years writing about investment strategies and the global economy for digital publications across the US and UK. His work focuses on making sense of economic policy, cost-of-living issues, and the stories that affect everyday Americans.
