Debates continue on whether credit scores should be used to figure car insurance
Aug 19, 2007
 The Federal Trade Commission recently weighed in on the debate over using credit scores as a factor in determining automobile insurance eligibility and premiums, releasing a study that largely sides with the industry.
The Fair and Accurate Credit Transactions Act of 2003 charged the FTC with investigating the use of credit scores in setting auto insurance rates. Among other things, the FTC was asked to determine the impact of credit-based insurance scoring on certain groups of consumers, such as low-income and minority consumers.
The FTC, using previous research, public comments and industry data, concluded that credit scores predict the number of claims consumers file and the total cost of those claims.
The Consumer Federation of America, the National Fair Housing Alliance, the National Consumer Law Center, and the Center for Economic Justice issued a joint statement criticizing the FTC’s methodology.
To read the FTC Credit Study text and accompanying documents, refer to the links below:
Credit-Based Insurance Scores:
Impacts on Consumers of Automobile Insurance:
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A Report to Congress By the Federal Trade Commission (July 2007)
Text of the Commission Report
Statement of Chairman Majoras, Commissioner Kovacic, and Commissioner Rosch
Dissenting Statement of Commissioner Harbour
Concurring Statement of Commissioner Leibowitz
News Release
Annual Report to Congress Regarding the Operation of the Hart-Scott-Rodino Premerger Notification Program: Federal Trade Commission (Bureau of Competition) and Department of Justice (Antitrust Division): Fiscal Year 2006
Text of the Twenty-Ninth Annual Report