Texas Watch

Insurance Credit Scoring

As a result of legislation passed in 2003, the vast majority of insurance companies in Texas now use credit scoring to determine a consumer’s eligibility and rates for homeowners and auto insurance.

Insurance credit scoring is a flawed tool used by insurance companies to unfairly deny coverage and increase rates. To calculate an individual’s insurance credit score, insurance companies use a complicated and secret industry formula that gathers information on a person’s payment history, amounts owed, length of credit history, etc.  None of these criteria have a real connection to a person’s insurance risk.

Having a low insurance credit score does not make it more likely that your home will be damaged or that an accident will happen to you.  Similarly, since insurance premiums are paid up front, it makes no sense that credit scores are involved.

Credit scoring is discriminatory.  Study after study has shown that credit scoring has a disproportionately negative impact on people with lower incomes, senior citizens, those who have experienced a medical bankruptcy, and racial minorities.

Take action now to stand up for Texas homeowners and tell your legislators that you support a ban on insurance credit scoring.