Credit reports are also notoriously unreliable. One study found 79 percent of reports contained errors, and 25 percent contained serious errors. Additionally, the secret nature of credit reports' inner workings leaves customers confused. Having too many credit cards results in a negative effect on the credit score, but so does having too few.
The insurance industry is increasingly relying on credit-scoring to slice up the market of potential insureds. The insurance industry claims that the use of credit-scoring saves the consumer money, but in fact, independent analysis suggests the industry may have squeezed an extra $67 billion in profit from the practice between 2003 and 2006.
Credit-scoring disproportionately disfavors minorities and the poor, many of whom lack to the credit history even to generate a credit score. The Consumer Federation of America uncovered documents from GEICO, one of the nation's biggest auto insurers, that showed a factory worker with just a high school diploma would pay 90 percent more for auto insurance that an attorney with a professional degree, even if their qualifications and driving record were identical. Credit scoring is just the most recent example of discrimination from an industry that has long been associated with practices such as redlining (refusing insurance to minority communities) and reverse redlining (charging more to minority communities).
Perhaps the most disturbing aspect of the insurance industry's use of credit scores is that it may only be the tip of the iceberg. Insurers are investigating whether they can predict who will make a claim by studying publicly retrievable lifestyle data. Your hobbies and grocery bills could be used along with your credit score to make insurance decisions.
Have You Been Injured In A Charleston South Carolina Area Car Accident?
If you've been injured in a car accident you should speak with a car accident lawyer as soon as possible. Contact us online or call our Charleston, South Carolina office directly at 843.488.2359 to schedule your consultation. We are also able to meet clients at our Conway, Myrtle Beach, Murrells Inlet, Mt. Pleasant, North Myrtle Beach or North Charleston office locations.
