Commissioner Watters immediately announced plans to appeal. "This decision will further delay Michigan consumers from receiving fairness," she said.

In his ruling, Judge Fisher backed industry claims about the practice.

"Based on the evidence submitted, there is no question that there is a high correlation between insurance scores and the expected risk and expenses associated with a policyholder," Judge Fisher wrote.

Washington, D.C.-based American Insurance Association assistant vice president David Snyder called the decision a "clear and decisive ruling that leaves little room for interpretation."

Personal lines insurers have been using credit scores since 1999 as a basis for premium discounts, said Michigan Office of Financial and Insurance Services spokesperson Andy Schor.

Ms. Watters issued a directive last October to not only ban the use of credit scores but also lower the base rate insurers will use in setting rates on July 1.

The case pitted the Lansing-based Insurance Institute of Michigan and several state property-casualty insurance companies with national trade organizations, against the Michigan Office of Financial and Insurance Services.

While Hawaii has banned the practice, and Maryland has done likewise for homeowners' insurance, Ms. Watters' action represented the first administrative ban of the practice.

"The rules actually abrogate the code by ordering rate reductions without the findings required by law, ignoring the due process requirements of challenging rules on an individual basis through a contested hearing subject to judicial review, and ordering industrywide rate reductions," Judge Fisher wrote.

The credit score ban and rate reduction order has the effect of raising premiums for lower-risk policyholders and lowering them for higher-risk policyholders, his opinion stated.