Iowa, Oklahoma, Pennsylvania, and New York Move to Ban Credit Scores in Auto Insurance Pricing

Lawmakers in four states want to stop auto insurers from using your credit score to price your premium. Iowa, Oklahoma, Pennsylvania, and New York all introduced bills in early 2026 that would ban credit-based insurance scoring. Forbes Advisor reported on April 29, 2026, that drivers with poor credit currently pay $4,604 per year for full coverage, while those with excellent credit pay $1,720, a yearly gap of $2,884.

The four bills would expand the small group of states that already prohibit insurers from factoring credit into auto premiums. California, Hawaii, and Massachusetts have full bans in place, and four additional states limit how credit can be used to deny, cancel, or refuse to renew policies. Every other state lets insurers price the same driving record very differently based on a credit-based insurance score.

What the Four State Bills Would Do

Iowa Representative Ken Croken filed House File 2259 after questioning whether credit ratings reflect driving risk. Croken told reporters he expected pricing to track driving history, garaging location, and driver age. State data cited by Insurance Business shows Iowa drivers with poor credit pay 140% more for auto coverage than excellent-credit drivers, the steepest penalty of the four bill states.

In Oklahoma, Senator Julia Kirt introduced SB 1435 in February 2026 as part of a three-bill package targeting insurance costs. The Oklahoma measure would prohibit insurers from using credit scores to set rates for homeowners policies, with companion provisions covering personal lines. Oklahoma drivers currently see some of the widest credit-tier rate gaps in the country.

Pennsylvania House Bill 657 would forbid insurers from using credit history to deny coverage, charge higher premiums, cancel policies, or refuse to renew. The bill covers personal insurance and life insurance, a broader scope than most credit-score reform proposals. Pennsylvania residents pay an average of $2,041 per year for full coverage today.

Assembly Bill A10524A in New York would block auto insurers from using a driver's credit score to refuse to issue or renew a policy or to set premium amounts. New York drivers already pay the highest average premiums in the Northeast, and the bill is one of several reform efforts moving through Albany this session.

How the Credit Score Penalty Breaks Down

The Forbes Advisor analysis of Quadrant Information Services data quantifies the penalty across four credit tiers. Drivers with fair, below-fair, or poor credit pay between 25% and 92% more annually than drivers with good credit, an extra $523 to $1,950 in premium.

Credit Tier	Avg. Annual Full-Coverage Premium	Extra Cost vs. Excellent Credit
Excellent	$1,720	Baseline
Good	~$2,243	+$523 (+25% range)
Fair / Below Fair	~$2,500–$3,300	+$780 to +$1,580
Poor	$4,604	+$2,884 (+92% range)

Source: Forbes Advisor analysis of Quadrant Information Services data, published April 29, 2026. Rates reflect averages for 40-year-old drivers with full-coverage policies and clean driving records. Quadrant Information Services data is the dataset cited by NAIC and most state insurance departments.

Why Lawmakers Are Pushing Back Now

The Consumer Federation of America has campaigned against credit-based insurance scoring since the early 2000s, calling the practice racially discriminatory in repeated filings. CFA research found drivers with poor credit can pay up to 283% more for auto coverage in some states. CFA also documented that zip codes with majority-Black populations pay higher premiums than majority-white zip codes, even before credit-score effects compound the gap.

Multiple state insurance commissioners have flagged the disparate impact of credit scoring in recent rate hearings. Washington and Maryland have run formal investigations into whether the practice violates anti-discrimination statutes. The April 2026 wave of legislation reflects mounting state-level pressure to act independently of federal rulemaking.

What the Insurance Industry Says

Bob Passmore of the American Property Casualty Insurance Association told CNBC in April 2026 that eliminating credit-based scores would make pricing less accurate and remove savings for many consumers. Industry trade groups argue that credit-based insurance scores correlate with claim frequency and reward drivers who manage finances responsibly. Insurers cite a 2007 Federal Trade Commission study that found credit-based scores predict losses, though that report has been challenged repeatedly by consumer groups for excluding race-related data.

"Credit-based insurance scoring has been especially harmful to Black and Brown drivers, who have faced systemic biases resulting in lower average credit scores and higher auto premiums."

Consumer Federation of America, "The One Hundred Percent Penalty," 2023.

What Drivers in the Four States Could Save

Annual savings would scale with credit tier. A driver in the bottom tier could see reductions approaching $1,950 per year if their state's bill passes. A fair-credit driver might save closer to $523 per year. Forbes Advisor estimated that drivers in any of the four states could save $500 or more annually if credit-based pricing ends.

Iowa drivers face the steepest gap. Insurance Business reported that Iowans with poor credit pay 140% more than excellent-credit drivers, well above the national 25%-to-92% range. Iowa's average full-coverage rate sits below the national mean for excellent-credit drivers, which means the credit penalty hits poor-credit Iowans even harder in absolute dollars.

Companies That Price Competitively for Bad-Credit Drivers

Even where credit-based pricing remains legal, switching carriers can cut hundreds of dollars from a premium. Forbes Advisor identified five carriers with the lowest average rates for drivers with bad credit.

Carrier	Avg. Annual Cost (Bad Credit)	Forbes Rating	Complaint Level
Nationwide	$2,100	5.0	Low
USAA	$2,521	4.6	Low
Travelers	$2,811	4.6	Very Low
Geico	$2,837	4.3	Low
Progressive	$3,315	4.1	Low

Source: Forbes Advisor's "Best Car Insurance Companies for Bad Credit," April 2026. Costs reflect average annual full-coverage premiums for drivers with credit scores below 580. Ratings are based on Forbes Advisor's proprietary scoring across coverage, complaints, and customer satisfaction.

What Happens Next

None of the four bills has cleared its full chamber yet. Iowa HF 2259 sits in the House Commerce committee, Oklahoma SB 1435 advanced from the Senate Insurance committee in March 2026, Pennsylvania HB 657 is awaiting House Insurance committee action, and New York A10524A is referred to the Assembly Insurance committee. State legislative sessions in all four states run through May or June 2026, leaving roughly six weeks for floor votes.

Insurance industry lobbyists have filed opposition testimony in every state. The American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies have argued that the bills will raise rates for good-credit drivers. Whether that prediction holds depends on what factors insurers substitute, since California, Hawaii, and Massachusetts have not seen overall rate spikes after their bans.

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