Number: RS21341
Title: Credit Scores: Credit-Based Insurance Scores
Authors: Government and Finance Division 
Abstract: Even though credit scores have been widely used for some time by credit-related businesses such as home mortgage lenders and credit card issuers, the use of insurance scores by insurers is relatively new. The growing discontent regarding the use of credit-based scoring has been reflected in proposed legislation amending the Fair Credit Reporting Act to require additional consumer protections, and in increased litigation. Insurance scores, like other credit scores based on credit reports, are regulated to some degree at the federal level. Unlike other credit scores, however, insurance scores used in the underwriting process are also subject to state insurance laws and regulations. Most of the states have been active in recently reviewing their laws and regulations in this area. Federal legislation in the 108th Congress that would have affected insurance scoring included H.R. 1473, H.R. 2796, H.R. 2622, and S. 1753. The latter two were the House and Senate versions of what would become P.L. 108-159, which mandated a study on the impact of insurance scoring.
Pages: 6
Date: January 19, 2005