Auto Insurance

Use of Credit Scores by Auto Insurers Adversely Impacts Low- and Moderate-Income Drivers

The use of credit scores by auto insurers to price policies has been a controversial issue over the past decade. Insurers argue that credit scores are correlated with claims frequency – the lower the credit score, the more frequent the claims – can serve as a useful factor in their pricing of auto insurance policies. Critics of this practice respond that correlation is not causation and that insurer use of these scores discriminates against low- and moderate-income drivers who, because of economic circumstance, are more likely to have lower credit scores than those with higher incomes.