U.S. Capitol Building
U.S. Capitol Building - 
Listen To The Story


Scott Jagow: Today, Congress takes up an issue that drives a lot of people crazy: The use of credit scores to determine insurance rates. The insurance companies say your credit score is a great predictor of whether you'll be filing an auto or a homeowner's claim. Consumer groups say no, it's not, and it's discriminatory. Steve Tripoli has more.

Steve Tripoli: The Federal Trade Commission mostly sided with insurers in a recent report.

But Allen Fishbein at the Consumer Federation of America calls the FTC's take flawed in several ways:

Allen Fishbein: Not the least of which is that they relied on the industry to supply hand-picked data, and based their research on that hand-picked analysis.

Insurers say people with bad credit file more claims. So using credit scores to set rates saves the majority from subsidizing risky folks.

Allen Fishbein says many consumers don't see why good drivers with, say, subprime mortgage trouble should end up paying lots for their car insurance.

Fishbein: People understand that if they have accidents, their rates go up. But they don't understand why their rates should go up if their credit score goes up.

The consumer groups also say minorities are disproportionately socked under the system, because their credit tends to be weaker.

I'm Steve Tripoli for Marketplace.