Texas ruling allows insurance providers to use credit scores to determine rates

In a recent decision that may put added pressure on consumers with bad credit, the Texas Supreme Court ruled that home and auto insurance providers could continue to use credit scores to determine coverage rates.

While an insurance company may base its premiums on a person's credit score, it cannot factor in race, religion or country of origin in their rate-making calculation.

Many providers use a consumer's credit score to determine a person's risk factor. In many cases, companies think that people who have trouble managing their credit accounts do so because of irresponsible use. This irresponsible behavior, providers say, makes these consumers more likely to get into an auto accident or have an issue with their homes.

Although a poor credit score may not accurately represent a person's likelihood to get into a car accident, with the state Supreme Court ruling in favor of insurance companies, consumers may have to focus on repairing their scores.

One method a number of bad credit consumers are using to improve their three digit numbers is removing inaccuracies and unfair items from their credit reports. Any marks that appear on a person's record but which cannot be substantiated by the credit company that reported it, can be challenged and potentially erased. Identifying marks that fail to meet federal compliance laws can be tricky, which is why some individuals will opt to work with a credit repair attorney during this process.