Insurance companies and age discrimination
By thewatchlist
@thewatchlist (653)
United States
January 11, 2007 12:56pm CST
In the US, many insurance companies are now also factoring in credit scores to determine risk level (and have been for the past 3+ years). Risk level shapes your premium amounts. Higher the risk equals higher payments.
I have a very good credit score (for my age when it happened) but my insurance took a huge increase a few years back when they inacted this policy. In my opinion, it is an issue of age discrimination.
Here is why... Insurance companies already ding young people as being a high risk category. Factoring in credit scores effectively gives younger people a second bad mark, since credit scores are partially based on the length of time you have had established credit. This second bad mark in turn raises premiums higher.
I have had two different insurance carriers (both major national carriers) and both used a 1 through 5 rating for credit and how it affects premiums. I've not been better than a 3 with either (even though my credit rating is over a 750, which is well above average).
Is this in a way a method devised to double penalize young people (thus making it age discrimination)? What are your thoughts on this?
2 responses
@bjone6 (348)
• United States
11 Jan 07
Unfortunately, insurance companies are out for profit. The best way for insurance companies to make a profit is to not insure people who are likely to get into accidents and who are not going to pay their bills. A credit score will give them the chance to rate you on your abilities to pay your debt to society. It sucks; however, you need insurance.
@thewatchlist (653)
• United States
11 Jan 07
Thanks for the response. I understand that they are running a business and need to be sure that they are making a profit. My issue is that they hit you once for being in the risky "young" category and then they hit you again due to credit score (which also dings you for being young since you don't have a long credit history).
