Drivers who have spotless records and have never had an at-fault accident may still face higher premiums as a result of insurers' credit scoring process, Consumer Reports magazine reported.

In reaction a property-casualty trade group said the publication was rehashing discredited arguments.

In its August issue, the magazine reports its investigation found that credit scores and their uses vary among insurers and their application could cost many drivers hundreds of extra dollars.

Neil Alldredge, senior state advocacy director for the National Association of Mutual Insurance Companies, said the article “rehashes false claims and specious arguments that were put to rest long ago after insurance scoring was subjected to rigorous analysis by university researchers and government agencies such as the University of Texas.”

The magazine found that credit scores used by insurance companies weigh credit data differently from traditional lender scores. As a result, insurance scores can penalize even those consumers who use credit reasonably, Consumer Reports wrote.

Mr. Alldredge countered that insurers use credit scores to predict loss while lenders use them to calculate probability of repayment.

Few insurers routinely disclose scores or what role they play in setting premiums, the magazine asserted.

Mr. Alldredge said that most states require insurers to disclose such data.

Consumer Reports also noted that the credit data from which the scores are derived have a reputation for being inaccurate and out of date.

“If credit scores are so unreliable, why are they so widely used?” asked NAMIC public policy director Bob Detlefsen in rebuttal.

Advocates from Consumers Union, the publisher of Consumer Reports, have been urging legislators and regulators in several states to ban the use of credit scoring to underwrite homeowners and auto insurance policies, the magazine notes.

“It's unfortunate, but perhaps not surprising, that CR would publish a piece of naked propaganda that is obviously intended to further its lobbying campaign,” Mr. Alldredge said.

Special Reports /

Consumer Reports Assails Credit Scoring Process

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