May 5, 2020
OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler is reminding consumers of a new federal protection that applies to how insurance companies use a consumer’s credit history.
The federal Coronavirus Aid, Relief and Economic Security (CARES) Act amends the Fair Credit Reporting Act and protects consumers during the coronavirus pandemic from any negative credit reporting as long as their accounts were in good standing before the pandemic started.
This protection also applies to how insurers use credit history to calculate how much consumers pay for auto and homeowners insurance.
“The initial focus of the act was on stimulus payments, but it’s also important to alert people to new protections regarding credit scoring,” said Kreidler. “Millions of people have lost their jobs and are likely struggling to pay their bills during this pandemic. It’s critical that we do what we can to make sure they’re not further harmed during these financially devastating times.”
The CARES Act:
- Prohibits a creditor from reporting an individual’s delinquent payments to a credit reporting agency if the individual was up-to-date on their payments before the pandemic started.
- If asked, a creditor may also allow an individual to defer one or more payments, make a partial payment, or modify a loan or contract.
The 120-day duration of the moratorium took effect March 27. It is likely to be extended until the federal administration declares an end to the current national emergency.
Kreidler has been a vocal opponent of the use of credit information in insurance and worked to restrict its use in Washington state early in his administration.
“I first heard about insurers using credit information 2001,” said Kreidler. “I thought it was incredibly unfair then and worked to limit its use. While some people may benefit, I still believe many more people are harmed by it.”
“I want people to know they have these new but temporary protections now and that I’m closely monitoring how insurers use credit information. If we see people are being harmed by its use, I’ll use my authority to limit the practice where I can.”
Washington state law restricts how insurers can use credit information when determining who to offer coverage to and how much to charge someone.
Anyone who believes their credit information has been misused by their insurance company should contact Kreidler’s consumer protection division either online or by calling 1-800-562-6900.