Credit Based Auto Insurance

 
The auto insurance industry has long held that it is important for them to check your credit history in order to determine what kind of policy and at what pricing they are going to offer you. They commonly say that the best way to determine your credit based insurance score is to look at your credit score, debt utilization ratio and your debt history for things like student loans and mortgages. The auto insurance companies use this money to determine how much money you are going to pay on your policy.
 
They say that the better you handle your finances the better a customer you will be for them, and that it makes you less likely to end up costing them money in claims. However, most groups want the practice banned as they say that it is discriminatory towards minorities. They argue that the auto insurance companies do not have any right to equate how someone pays their bills with how they drive. They say that if you lose your job or have a medical issue you could get behind in your bills and the auto insurance companies will penalize you for that.
 
They also say that this auto insurance practice discriminates based on race and income and it leaves those with more money able to pay less on their policies, and those with less money having to pay more. The auto insurance companies say that they use it and that it encourages “competition” and “fairer pricing” on their auto insurance policies.

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