Multi-state credit scoring study scrapped

Several states have agreed to scrap a joint credit scoring study they had been pursuing in favor of an agreement with insurers who will provide data to the federal study on the same issue.Thirteen states led by Missouri had originally taken up their own study, despite one already in the works by the Federal Trade Commission (FTC) following the renewal of the Fair Credit Reporting Act. While some states had dropped out of the study, insurers had threatened to seek legal action against those still involved to have the study halted.Discussions have resulted in the formation of a five-member panel of the National Association of Insurance Commissioners (NAIC) to work with the FTC and the Federal Reserve Board on the FCRA-mandated study, and for insurers to provide data and support for this study. However, states have reserved the right to reopen their own study if they are not satisfied with the federal process.That said, Missouri insurance commissioner Scott Lakin says he feels confident the process will work, and calls the agreement a “win-win proposition”. “Independent researchers will have access to the data needed to answer the important questions that state insurance officials have been asking about the effect of credit scoring on consumers, and the industry can keep its administrative burdens to a minimum.”