A national class action has been filed in Texas against insurance giant United Guaranty Residential Insurance Company on behalf of all consumers for whom United Guaranty issued a mortgage insurance policy at a disadvantageous rate due to derogatory information contained in a credit report, and who did not receive notice that derogatory information obtained from a credit report was used in setting the insurance premium. The insureds claim that United Guaranty uses credit reports to set premiums but does not provide any information to consumers when an adverse decision has been made based on that report. The insureds allege that this violates the federal Fair Credit Reporting Act. They seek actual damages as well as statutory damages and declaratory relief.

Under the Fair Credit Reporting Act, whenever an adverse decision has been made regarding a consumer based on information contained in a credit report, the consumer must be notified in writing and must be advised of his or her right to obtain a copy of the report relied upon. The insureds in this case allege that United Guaranty routinely relies on information found in credit reports when establishing premiums for mortgage insurance. However, according to the insureds, United Guaranty does not make it known to insureds when it has taken adverse action against them based on information found in their credit report. The insureds allege that this violation of the Fair Credit Reporting Act is both negligent and intentional on United Guaranty's behalf. They further allege that this is a corporate policy of United Guaranty's and that violations number potentially in the tens of thousands as United Guaranty is one of the nation's largest writers of mortgage insurance, with 26 regional offices nationwide.