Canceling credit cards or using a charge card with no set spending limit can upset the credit utilization ratio used by many credit scoring services. Kreidler's office heard from Washington residents who had taken these steps to save money on finance charges, only to discover that a decreased credit score caused a spike in their insurance premiums. Frequent requests for in-store credit and allowing older credit cards to lie dormant can also cause the kind of credit score changes that boost insurance costs. Kreidler's proposal would force insurers doing business in the state to rely on personal interviews and insurance history profiles instead of on credit reports to make policy decisions.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.