On September 25, 2009
Consumer Group Says Insurers’ Use of Credit Scores Has Flaws
Credit scores are one of property insurers’ favorite tools to separate the sheep, those who will get car and homeowners’ insurance policies, from the goats, those who will be rejected or charged more. Most states allow insurers to do this, albeit with some restrictions and many misgivings. Someone with a low credit score is more likely to live in an urban area, have a minimal or no bank account, and other financial problems. If banks aren’t allowed to “redline” poorer neighborhoods, why are insurers able to discriminate against people who likely have more debt? Insurance companies argue that drivers preoccupied with a child’s medical bills are more likely to have an accident. Cars parked on streets in rundown neighborhoods are…
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