December 01, 2013 1 min read

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

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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.

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