We had a chance back in 2004 to vote against the use of credit. We Oregonians voted to allow insurance companies to use credit in all insurance-related pricing, just as if we were applying for a car loan or home mortgage. They can even deny you coverage or raise the price on you if you have poor or no credit.

An example I point to among my own customers. Married male, female, and two teenage male drivers with three full covered cars. The policyholder, who has a credit score of 850, pays about $1,800 for six months. And that’s with an accident and a couple of speeding tickets for the primary insured. Now compare that to a widowed mom of three in her forties with liability only on her older, nearly broken down vehicle. She has bad credit due to unpaid medical bills after her husband passed away from cancer. She has a perfectly good driving record. Never in an accident. Never a ticket. She pays $1300 for six months. Now tell me, how does someone’s credit predict their ability to drive safely?

Since the above example that occurred early in the history of using credit, I’ve noticed insurance companies have toned down the use of consumer credit and invented something the industry calls insurance credit. It’s a composite of several factors, not just the consumer credit score, although that’s still the major part of it. They combine other factors like social media presence, criminal record, number of times a policyholder changes companies, lets the policy lapse, and makes changes to the policy. I don’t see the wild disparity between someone with bad credit and no driving record history of tickets and accidents and the driver with great credit and a terrible DMV report.