If you signed up to participate as a class member in the suit against Allstate last year you will be delighted to learn that you may be getting some money for your trouble IF you suffered damages as a result of Allstate’s actions. That is a fancy way of saying that if there are mistakes on your credit report, and your premiums went up, you will get a check. And some members of the class will get a reduction in premiums. More information about the different classes.
I love this outcome! It means that insurers can’t get away with looking at consumer credit reports without a good reason to do so. Under the Fair Credit Reporting Act (‘FCRA’), everyone who uses your credit report must have a good reason (a legally permissible purpose) to access your credit history. Further, if an insurer takes some adverse action against you, like raising your premiums it is required to give you notice of what it is doing within a certain amount of time.
Plaintiffs in the lawsuit against Allstate alleged that Allstate did not have a permissible purpose under the FCRA to obtain the credit reports, and that Allstate did not send the requisite notices to some members of the class within the time allowed under the FCRA. The case did not go to trial. Instead, the parties to the suit reached a settlement. It is important to note that the suit was NOT about the prices Allstate charges, or the coverage it sells.
Members of the class will soon receive notice that they are entitled to a free credit report so they can check their reports. Class members have 30 days to report any mistakes they find. So take the time to look carefully at your credit reports. Here are some things to look for – Is everything there, and is everything correct?
- Personally Identifiable and Employment Information: Your date of birth; Social Security number, addresses (past and current); telephone number (including unlisted numbers); employer, your spouse’s name if your spouse is listed or responsible for any credit payments; and name variations. For example John Smith, Jonathon Smith, JT Smith etc.
- Payment History: Date when credit was extended, how much money was extended; length and number of times you have been late in paying; referrals of overdue accounts to agencies; and charge-offs.
- Credit and Investigative Inquiries: Two years of credit related inquiries and 2 years employment history.
- Public Records: Most civil and criminal actions; bankruptcies, foreclosures and tax liens.
- Consumer Statements: Any statements you may have added to your report
- Summary Lines
This is what should not be in your report.
- Chapter 11 bankruptcy case more than 10 years old.
- Civil suits, judgments, or arrests more than 7 years old (or the governing statute of limitations, whichever is longer).
- Tax liens that were paid 7 years earlier.
- Accounts that were charged off or collected against which are older than 7 years.
- Any other adverse item, except a conviction record, that is older than 7 years.
- Name and address of medical information furnisher with some exceptions.
- Medical information unless you previously consented to release it.
- Age, race or marital status may not appear on Investigative Reports used for employment purposes.
- Information reported in response to an application for a job with a salary of more than $75,000.
- Information reported because of an application for more than $150,000 worth of credit or life insurance.
Scratching your head and wondering why auto insurance companies need to look at your credit reports before they sell you insurance or renew your policy? A lot of us are wondering the same thing. Do you think the cost of your auto insurance should be based on your credit history? Let us know in the comments section below
{ 6 comments… add a comment }
Because people with good credit are less likely to file claims. So if they stop checking credit reports, their ability to segment risk groups is less, so people who’d otherwise get great rates get slightly worse rates. On the other hand, there are also others who benefit in the form of lower rates than they’d otherwise have qualified for.
The insurance company should NOT be running credit report inquires. They are to insure people based upon their DRIVING RECORD, not their PAY HISTORY!!! These companies are NOT issuing credit. Leave my credit file ALONE!!!!!
Anonymous is full of it just like the insurance companies that paid for those results.
I was a far worse driver when my credit was good. Now, knowing that I would face very adversarial rates to purchase another car with my poor credit, I am as careful a driver as I have ever been. I have not had an accident in over a decade, and only one ticket in that same period. The idea that insurance companies can stick it to people who can afford it the least is just more of the same taking advantage of people who have limited options.
Credit checks for insurance are bullshit!
I THINK YOUR INSURANCE RATES SHOULD BE JUDGED ON YOUR DRIVING RECORD AND YOUR CLAIMS FILED!
I have been paying Allsate for home insurance 38 years and my car insured for 37 years.No claims on either insurance policy. They increased my car insurance $396.00 because I locked my credit report. I refuse to unlock it for them. Having no claims and making all payments means nothing to them.
I am in my early sixties and do not believe in credit. I have a few collections on my credit history due to illness and a long-term family medical emergency.
I have had the same insurer for over 10 years (Farmers) with no accidents or claims against them.
They still insist on raising my insurance rates every year based on my credit history.
I live in Oregon and just read this: “The 2003 Oregon Legislature passed Senate Bill 260, which prohibits the use of credit scoring to increase premiums for existing olicyholders, and prohibits insurers from using credit records to cancel or not renew existing policyholders.”
I am going to check this out further as it appears they are operating illegally.
Based on mmy age and driving record, my rates should e decreasing, not increasing.
As was said above… “This is TOTAL BULLCRAP” !