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The Washington State Credit Scoring Ban and What it Means for You

On June 20, 2021, a big change went into effect impacting insurance carriers and their policyholders in Washington state. These changes are due to an emergency order that was passed in March by the state’s Insurance Commissioner, Mike Kreidler. The order prohibits insurance carriers from using a person’s credit information when determining their policy, rates, and underwriting. It is a massive shift and one that will affect those with auto, boat, RV, homeowner, and rental policies. Rates for some will increase considerably, while others may see a slight reduction.

While the change goes into effect for new business as of June 20th, 2021, the credit scoring ban will not affect current policies and premiums until the next policy renewal date. 

In this article, we’re exploring the many ways this emergency decision will influence the insurance industry throughout the state of Washington. Then, we’re discussing the potential impacts that could extend into Oregon.

What is a Credit-Based Insurance Score?

Insurance companies have been using credit-based scoring since the 90s when a correlation was discovered between credit score and the likelihood of making a claim. As with most credit-based scoring, individuals with higher credit scores generally receive lower insurance premiums. And, because of its long history of use, credit-based insurance scoring is generally quite accurate and effective at determining a policyholder’s risk. 

One important point to note is that credit-based insurance scoring is not your FICO credit score. Your FICO credit report will be a determining factor in your credit-based insurance score, but the numbers are calculated a bit differently. 

What’s the Problem with Credit-Based Insurance Scoring?

Despite its long-term use and extensive predictability, critics of credit-based insurance scoring believe that it’s inherently unfair. Mike Kreidler believes this approach to insurance scoring is tougher on communities of color and people with a lower income. 
The practice “has always been unfair,” says Kreidler, whose main argument against it is the fact that many insurance policies are mandatory. Governor Jay Inslee added that this type of scoring is discriminatory “because this practice results in low-income people and people of color paying more for insurance.”1

There are Other Ways to Handle Discrimination in Insurance 

It’s true; credit-based insurance scoring is quite harmful to certain populations. In Washington, where the average credit score is 723, a large percentage of people may receive attractive insurance rates. But, this still doesn’t take away from those being disproportionately affected by the approach. The research shows that credit-based insurance scoring harms black Washingtonians, who are more likely to have a low or no credit score.2 In fact, drivers with excellent credit but a terrible driving record (including a DUI) tend to pay an average of $847 less on insurance than someone with a clean record but poor credit.

Completely eliminating credit scoring from the rating process may not be the right approach. Discrimination has not historically been a true priority in insurance rating, and it’s not one that’s currently regulated. Because of this, unconscious bias could continue in the rating process that carriers choose to employ. 

Will Oregon be Affected by This Change?

On June 20, 2021, Mike Kreidler’s emergency order will affect the entire state of Washington. Carriers throughout the state were required to file new rating plans, and rates could increase significantly for millions of policyholders. Oregon may not be far behind, as lawmakers are considering the possibility of following suit. 

A recent amendment to HB 2045, which is currently working to receive support throughout the state, eliminates the possibility for credit-based insurance scoring in Oregon. The Oregon Insurance Lobby predicts that the passing of this bill will significantly hike insurance rates for many Oregon consumers. 

Some early predictions estimate that the elimination of credit-based insurance scoring will cause:

  • 1 in 7 auto policyholders to see an increase over 10%
  • 1 in 4 homeowner policyholders to see an increase over $100
  • 3 in 5 auto and homeowner policyholders to see an increase in their rates

What Can You Expect in Oregon? 

Washington State has already chosen its fate. The emergency order will stand for the next three years when legislation will be requested to make the change permanent. Oregon doesn’t have to follow the same path. In 2006, 64% of Oregon voters said NO to Measure 42, a measure that sought to eliminate credit-based insurance scoring on the statewide level.


  1. Office of the Insurance Commissioner. (2021, March 23). Kreidler issues emergency rule banning credit scoring for three years.
  2. Office of the Insurance Commissioner. (n.d.). Credit scoring ban.

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