Auto Insurance Rates - impacts of credit score

Using credit scores as a factor in determining auto insurance rates & eligibility is a standard practice. For years, auto insurance companies have maintained that a person's scores are a valuable predictor of whether someone will file an auto insurance claim sometime in the future.

Consumer advocates say using credit scores to set auto insurance rates unfairly hurts blacks and Hispanics because those groups tend to have lower credit scores and thus end up paying more for their auto insurance. They also complain that errors in credit files can result in lower scores and thus higher insurance premiums.

The Federal Trade Commission recently weighed in on the debate, releasing a study that largely sides with the auto insurance industry.