Monday, December 17, 2007

Credit Score Used by Insurers

Congress will began looking into where the insurance industry's use of credit score to determine a customer's insurance risk discriminate against certain groups of Americans.

Critics argue thta credit scoring models negatively impact minorities and low-income Americans.

A Federal Trade Commission study results indicated that credit-based scores are effective predictors of automobile insurance risk. Using credit scores is likely to lead to increased insurance payments for 64% of African Americans, 53% of Hispanics and 38% of non-Hispanic whites.

Four statees have banned insurers from using credit scoring outright: California, Maryland, Hawaii and Delaware.

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