FOR IMMEDIATE RELEASE
(Free-Press-Release.com) June 8, 2008 -- Bill H.R.5633 has been introduced on Capitol Hill by Democratic Rep Luis Gutierrez.

The bill is designed to prohibit insurance companies from factoring in credit in the determination of auto and home insurance rates.

According to some, the use of credit negatively affects certain classes of people, particularly minorities. If your credit is below average you are likely to pay a higher insurance premium. And it is believed that minorities have lower credit scores, on average.

Insurance companies counter that credit gives them one additional tool to use to better price their product. Studies and statistics seem to back up their claim too. An FTC report suggests that credit may indeed be an effective indicator of risk, though this study has been refuted

by opponents of insurance companies.

Insurance companies have suggested that insurance rates will go up if they are not allowed to use credit scoring. Other factors that go into making up an auto or home insurance premium include zip code, claims history, age, type of vehicle, age of home, and discount. However, credit scoring may be the number one tool on this list as it places you in a particular tier, before other factors are considered.

Regardless what Capitol Hill does about insurance credit scoring, consumers would be wise to improve their personal scores anyway. Better credit translates to better interest rates on things like car loans and home loans. The better the interest rate, the lower your payment. So insurance is not the only industry where someone

can benefit from good credit, or pay higher payments because of poor credit.

For now, the bill is being looked at and considered.

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