Credit scoring has sometimes resulted in lenders "red-lining" certain "undesireable" zip codes. Red-lining means that your score, and the scores of all your neighbors, are lowered because you chose to live in a community or neighborhood that doesn't fit the lender's profile or demographic.
When auto insurors use credit scoring in underwriting, a person with a flawless driving record can be rated a higher risk - and be quoted a higher rate - than a person with moving violations or accidents. The good driver's credit score may have been lowered by recent credit inquiries, zip code, martial status in relation to age, or other factors irrelevant to his insurance risk. But the companies believe credit scoring helps prevent losses due to fraud and irresponsibility.
For a definitive article on the perils of credit scoring, visit Victims of Credit Scoring. Or see how credit scoring affects the auto insurance rates you're quoted at Consumer Aid Education Center. Check out the so-called consumer article on credit scoring that my local TV station has posted on its web site. It hews to the credit industry's party line: WFLA..
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