Lost your job? Bad credit? Trouble paying your bills?

The insurance industry has a special present for you: heftier premiums.

Without knowing it, hundreds of thousands of Oregonians are paying higher rates for home and auto insurance thanks to a controversial practice known as "insurance credit scoring," which penalizes policyholders for having an imperfect credit history.

In some cases, people have been charged higher rates--or denied coverage altogether--simply because they don't carry credit cards.

"It's kicking people when they're down," Sen. Charlie Ringo (D-Beaverton) told WW. "If you lose your job, that's no reason to pay more for car insurance."

Now a grassroots coalition of consumer advocates, farmers and students is taking aim at insurance credit scoring with a proposal to outlaw the practice. If Senate Bill 260 becomes law, Oregon would be one of the first states to impose an outright ban.

To a large degree, the insurance industry is dedicated to the proposition that some people are higher risks than others. People with crummy driving records, for example, pay higher rates for car insurance, as do younger males and drivers of sports cars.

What infuriates consumer advocates about credit scoring, however, is that owing a few dollars to Blockbuster has nothing to do with your driving record. "I am baffled that the insurance industry can say with a straight face that paying a bill late will cause someone to get in an accident," says Steve Dixon of public-interest watchdog group OSPIRG. "It's junk science."

Industry lobbyists defend the scheme, however. Credit history, they say, is one element in a complex formula that allows insurers to offer better rates to low-risk customers.

"There's a very strong correlation between credit scores and potential risk," says insurance lobbyist Steve Telfer. "If you have poor credit, there's a strong likelihood you're a poor insurance risk."

This is not a new argument. In the past, insurance companies used factors such as race, religion and national origin to set rates. The use of those factors is now considered morally repugnant and, incidentally, illegal--even though they may still retain some statistical validity.

Despite its potential to discriminate, credit scoring has become increasingly widespread in the insurance industry over the past decade. According to the state insurance division, 92 percent of carriers now use credit scoring when writing auto policies, and many employ it as a factor in setting homeowners' rates.

Ironically, some of the staunchest opponents of credit scoring are the insurance agents who write the policies. "This seriously harms the financially disadvantaged," says one State Farm agent, who spoke to WW on condition of anonymity. "The single moms who can't pay the bills, the people who have medical emergencies, the families with sick children. It punishes them even though they've never filed a claim."

Just ask Janice Wilson, a 44-year-old family advocate in Eugene who bought a new Toyota Corolla last year. Initially, Allstate Insurance quoted her a price of $480 a year. The next day, however, Allstate said that credit problems would hike her bill to over $800 a year.

In fact, Wilson holds a mortgage and has excellent credit. But she doesn't have any credit cards--which Allstate counted against her. "I was shocked and I was angry," she told WW. "I thought it was totally unfair."

Consumer resentment against credit scoring has been sharpened by several factors: the industry's reluctance to inform policyholders that it has been snooping into their credit history, the industry's inability to explain why a person's credit problems might affect their driving record, and the industry's refusal to divulge the formulas used in setting rates.

"They've been so secretive, it's hard to know what's going on," says OSPIRG's Dixon. "You can't see inside the black box."

Taken together, these factors have unleashed a backlash from groups as disparate as Naderite consumer advocates and fundamentalist Christians.

"This practice is ungodly, it's wrong, and we've got to change it," says Oregon Christian Coalition Executive Director Lou Beres. "When you start charging people more money for something that has nothing to do with their driving record--it's taking advantage of small people who can't fight the insurance companies."

The Senate is scheduled to vote on SB 260 Wednesday; most observers expect it to pass. The measure may run into stiff opposition in the House, however. "House Republicans are facing enormous pressure from the insurance lobby," says Dixon.