Credit Scoring

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The state is looking to ban the use of credit scoring in setting home and auto insurance rates. The state says the scores are often based on incomplete and incorrect information.

The insurance industry says it's a consistent and effective tool to evaluate risk.

A public hearing was held at the Michigan Historical Library on Monday. State officials believe credit scoring unfairly discriminates against the poor and those with bad credit.

The insurance industry says it's insulted by this claim and says credit based insurance scoring discounts allow many consumers to pay less for insurance.

The proposed ban is scheduled to take effect on Jan. 1, 2005. State officials estimate insurers will be required to roll back base rates between 10-percent and 45-percent.