Because they often result in a rush of expensive bills in a relatively short period, natural disasters or serious illnesses can have a negative effect on a person’s credit score, which can then drive up that person’s insurance rates.

However, officials in one Midwestern state are examining the possibility of reducing the effect of a reduced credit score on insurance rates. Iowa lawmakers are considering giving the state’s residents the option to contest increases in their insurance that result from certain hardships.

Through the law, companies that provide insurance will have to inform their customers when a lowered credit score leads to higher insurance premiums. If the credit score change is tied to things like natural disasters, the consumer will be able to get the increased rate reversed.

The legislation may help Iowa residents if passed, but consumers across the country still face the prospect of a lower credit score affecting other portions of their life. For example, they may end up not qualifying for a job if their credit report shows significant debt, because employers try to reduce their risks when hiring.

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