Your credit history could have an impact on your automobile or homeowner's insurance. More and more insurance companies are using credit information and insurance scores as one source of information when deciding whether they will provide insurance coverage and what they will charge for the coverage. Many insurance companies assert that there is a statistical correlation between a person's credit history and the chance they will have a claim. They believe the worse your credit history, the more likely you are to submit a claim.

There is no specific law in Wisconsin that prohibits an insurance company from using credit information in the underwriting and rating process. However, in 1997, the Office of the Commissioner of Insurance (OCI) issued a bulletin to insurers that clarified the office's position regarding the use of credit information in the underwriting process. That bulletin can be found on the OCI Web site at http://oci.wi.gov/bulletin/61697bul.htm. It contains, among other things, the following relating to the OCI's position on this issue:

• Insurers should not use credit information as the sole reason to refuse an application, cancel a new policy in the first 60 days or not renew an existing policy.
• Insurers should disclose to the applicant or insured the items on a credit report which contributed to the underwriting decision.
• Insurers should consider any information received from the applicant or insured about any inaccuracy contained on a credit report pertaining to the adverse underwriting decision.
• Insurers should disclose on their insurance applications that credit information may be used and list the circumstances when a credit report will be ordered.

Insurance consumers should be aware of this practice and take some precautions to ensure that their credit history is accurate and timely. Here are some suggestions:

1. Periodically check your credit report. Three major credit history companies are Equifax (1-800-685-1111, www.equifax.com), Experian (1-888-397-3742, www.experian.com) and TransUnion (1-800-888-4213, www.tuc.com). Consumers should remember that insurers pay for abbreviated credit reports and do not see the full report that is usually provided to the consumer.
2. You can go to the Web sites above and, for a fee, order your credit history report. If you find any error or if you contest any of the findings, there is a process you can and should follow to make your credit report accurate.
3. Ask the agent with whom you are applying for insurance if the company or companies he or she represents use credit information in the rating and underwriting process. Find out what credit information they use and how they use it.
4. If you are denied coverage or rated up, find out why, and whether credit history had anything to do with it. You should be given a complete and accurate explanation of the insurance company's actions.
5. If the reason for the adverse action is caused, in part, by your credit history, ask what specifically in your credit history is contributing to the company's action. And, ask whether there is anything you can do to mitigate the action. Some insurers will work with you and provide you coverage if they know you are addressing your credit history.

If you feel that the insurance company or agent are not responsive to your inquiries or you feel that you are being treated unfairly, contact the OCI and file a complaint. The OCI can be reached by phone at 1-800-236-8517, by mail at Office of the Commissioner of Insurance, PO Box 7873, Madison, WI 53707-7873 or by e-mail at ocicomplaints@wisconsin.gov. More insurance information is available at http://oci.wi.gov.

By Guenther Ruch, Administrator
Division of Regulation & Enforcement
Office of the Commissioner of Insurance