Are companies allowed to use credit ratings to determine eligibility and rating for insurance coverage?
Yes, they can and many do. Under Federal law, the Fair Credit Reporting Act allows insurers to use credit information for underwriting purposes. Credit reports and/or scores are a commonly used rating tool; however, the State Board for Property and Casualty Rates has established Credit Scoring Guidelines (see Bulletins for copy) that prohibit certain practices by insurance carriers for auto and homeowners coverages.
