A Dallas Morning News analysis on rates charged for home insurance revealed dramatic increases in the premiums paid by homeowners who have low credit ratings. For those hard hit by the recession, this can be the final straw. Among top home insurers, 19 of the 26 largest companies admit they charge higher rates for those with low credit scores and they can be loaded by as much as 2 1/2 times!

The state’s three largest insurers, State Farm, Allstate and Farmers, all rely on credit information to determine individual premiums. The use of credit scores in this way is perfectly legal and the insurance industry maintains it is necessary to make sure that those who pose a bigger risk pay higher premiums. Meanwhile, consumer groups and civil rights advocates argue that low-income families are penalized because of a single factor which has little to do with homeowner insurance. It is hard to see how credit can affect the likelihood of a home being hit by a hail storm. A spokesman for Texas Watch, commenting on this trend, noted that credit card companies have reduced the credit limits for many good customers, thereby increasing the ratio of their credit card debt compared to their limit. The higher the ratio of debt, the lower a person’s credit score – and the more they pay for insurance.