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Unfair Use of Credit Data May End – in Florida

Tuesday, February 24th, 2009

You know that one reason why you need to keep your credit scores high is to keep your insurance premiums low. Companies that issue insurance on your home and your car have been using low credit scores as an excuse to raise your premiums – or to completely deny you access to insurance.

Even long-term customers may find their rates skyrocketing as a result of financial difficulties that have affected their credit scores.

In Florida, at least, this practice may soon come to an end. Consumer advocates say a person’s credit has nothing to do with his or her driving abilities, and that insurers should only be able to use a person’s driving record in determining automobile insurance rates.

Insurers, including Allstate, Geico, Progressive, Nationwide, and State Farm, testified in hearings last week – saying that credit information does help them determine a customer’s risk.

They compared use of credit data for car insurance to use of health data for medical or life insurance. If a person smokes, they’re at a greater risk for ill health, so in their eyes, it seems to follow that if a person has poor credit, they’re at a greater risk for an automobile accident. So their belief is that in spite of having no tickets and no accidents, a low credit score makes a person a higher risk for an accident claim.

Although not stated in the report, perhaps the real issue is that insurers feel that consumers with poor credit are a greater risk for insurance fraud. If that is the case, they should present the statistics to back the belief.

Some consumer advocates believe that there is yet another hidden agenda: Thinking that use of credit rating data enables insurance companies to discriminate against certain groups – by either charging them excessive rates or denying insurance altogether.

If Florida changes this law, it will be a step forward for consumers. But there’s a long way to go before all states adopt similar rules. That means it is still in every consumer’s best interests to keep their credit scores in the high ranges.

The first step is to check your own credit report, with scores, and see how you stand. Almost everyone can find some room for improvement, so begin making adjustments to your spending and bill-paying habits in an effort to raise the score.

Be sure to also check your report for errors – even credit bureau representatives say that 25% of all credit reports have at least one mistake. Fixing those could give your score an immediate boost.

Author: Mike Clover your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.