TDI | Texas Department of Insurance


Use of Credit Information Disclosure

Form CD-1 

P.O. Box 5300
Binghamton, NY 13902-9953
Te 1-866.960.8609

We will obtain and use credit information on you or any other members of your household as a part of the insurance credit scoring process.

If you have questions regarding this disclosure, contact the insurer at the above address or phone number. For information or other guestions, contact the Texas Department of insurance at 1-800-578-4677 or PO Box 149104, MC 104-PC, Austin, TX 78714.


Section 559.09 of the Texas Insurance Code requires an insured or its agents to disclose to its customers whether credit information will be obtained on the applicant or insured or on any other member(s) of the applicant's or insured's household and used as part of the insurance credit scoring process.


If credit information is obtained or used on the applicant or insured, or on any member of the applicant's or insured's household, the insurer shall disclose to the applicant the name of each person on whom credit information was obtained or used and how each person's credit information was used to underwrite or rate the policy. An insurer may provide this information with this disclosure or in a separate notice.


Adverse effect means an action taken by an insurer in connection with the underwriting of insurance for a consumer that results in the denial of coverage, the cancellation or nonrenewal of coverage, or the offer to and acceptance by a consumer of a policy form, premium rate, or deductible other than policy form, premium rate, or deductible for which the consumer specifically applied.


Credit information is any credit related information derived from a credit report itself, or provided in an application for personal insurance. The term does not include informationthat is not credit-related, regardless of whether the information is contained in a credit report or in an application for insurance coverage or is used to compute a credit score.


Credit score or insurance score is a number or rating derived from a mathematical formula, computer application, model, or other process that is based on credit informationand used to predict the future insurance loss exposure of a consumer.


An insurer may not:

(1)   use a credit core that is computed using factors that constitute unfair discrimination;

(2)   deny, cancel, or nonrenew a policy of personal insurance solely on the basis of credit information without consideration of any other applicable underwriting factor independent of credit information; or

(3)   take an action that results in an adverse effect against a consumer because the consumer does not have a credit card account without consideration of any otherapplicable factor independent of credit information.


An insurer may not consider an absence of credit information or an inability to determine credit information for an applicant for insurance coverage or insured as a factor in underwriting or rating an insurance policy unless the insurer:

(1)   has statistical, actuarial, or reasonable underwriting information that:

(A)   is reasonably related to actual or anticipated loss experience; and

(B)   shows that the absence of credit information could result in actual or anticipated loss differences;

(2)   treats the consumer as if the applicant for insurance coverage or insured had neutral credit information, as defined by the insurer; or

(3)   excludes the use of credit information as a factor in underwriting and uses only other underwriting criteria.


NEGATIVE FACTORS. An insurer may not use any of the following as a negative factor in any credit scoring methodology or in reviewing credit information to underwrite or rate a policy of personal insurance:

(1)   a credit inquiry that is not initiated by the consumer;

(2)   an inquiry relating to insurance coverage, if so identified on a consumer's credit report; or

(3)   a collection account with a medical industry code, if so identified on the consumer's credit report.


Multiple lender inquiries made within 30 days of a prior inquiry, if coded by the consumer reporting agency on the consumer's credit report as from the home mortgage or motorvehicle lending industry, shall be considered by an insurer as only one inquiry.


EFFECT OF EXTRAORDINARY EVENTS. An insurer shall, on written request from an applicant for insurance coverage or an insured, provide reasonable exceptions to the insurer's rates, rating classifications, or underwriting rules for a consumer whose credit information has been directly influenced by a catastrophic illness or injury, by the death of a spouse, child, or parent, by temporary loss of employment, by divorce, or by identity theft. In such a case, the insurer may consider only credit information not affected by the event or shall assign a neutral credit score.


An insurer may require reasonable written and independently verifiable documentation of the event and the effect of the event on the person's credit before granting anexception. An insurer is not required to consider repeated events or events the insurer reconsidered previously as an extraordinary event.


An insurer may also consider granting an exception to an applicant for insurance coverage or an insured for an extraordinary event not listed in this section. An insurer is not out of compliance with any law or rule relating to underwriting, rating, or rate filing as a result of granting an exception under this article.


NOTICE OF ACTION RESULTING IN ADVERSE EFFECT. If an insurer takes an action resulting in an adverse effect with respect to an applicant for insurance coverage or insured based in whole or in part on information contained in a credit report, the insurer must provide to the applicant or insured within 30 days certain information regardinghow an applicant or insured may verify and dispute information contained in a credit report.


DISPUTE RESOLUTION; ERROR CORRECTION. If it is determined through the dispute resolution process established under Section 611(a)(5), Fair Credit Reporting Act(15 U.S.C. Section 1681i), as amended, that the credit information of a current insured was inaccurate or incomplete or could not be verified and the insurer receives notice of that determination from the consumer reporting agency or from the insured, the insurer shall re-underwrite and re-rate the insured not later than the 30th day after the receipt of the notice.


After re-underwriting or re-rating the insured, the insurer shall make any adjustments necessary within 30 days, consistent with the insurer's underwriting and rating guidelines. If an insurer determines that the insured has overpaid premium, the insurer shall credit the amount of overpayment. The insurer shall compute the overpayment back to the shorter of the last 12 months of coverage; or the actual policy period.