HARTFORD, Conn. (AP) _ Allstate is conducting routine credit checks on new applicants for automobile insurance in at least 36 states to weed out bad risks, a practice consumer advocates fear could start a trend in the industry.

Allstate, the nation's second-largest car insurer, also is considering whether to make credit checks routine for new homeowner policies.

New applicants with poor credit records may be rejected or offered higher- priced policies, but current policyholders will not be dropped solely because of credit problems, the Sears, Roebuck and Co. subsidiary has told regulators.

Use of credit reports in selecting insurance customers is legal in most states. But most auto insurers check only if questions arise, not as a routine practice.

It's just another way for insurers to ''cherry-pick the best customers and leave the rest of us with inadequate or expensive coverage,'' said Greg Haddad, a lobbyist for the Connecticut Citizen's Action Group.

But Allstate, which already has been barred from using credit checks to screen applicants in Washington state, defended the practice as a good way to determine bad risks.

''This is not a recipe for rejection,'' said Al Orendorff, a spokesman for Northbrook, Ill.-based Allstate. ''This is our attempt to be as fair as possible to the greatest number of people.''

Still, Haddad said he fears other insurers will follow Allstate's example. He questioned how credit reports could determine how well someone drives a car.

''There are a lot of decent people out there who've had credit problems,'' he said. ''It's unfair for an insurance company to infer they're an irresponsible person.''

Allstate says its statistical research shows that people with credit problems are more likely to have auto accidents. But executives declined to to state the percentage of people with credit problems who had accidents, saying the company did not want to share the information with competitors.

Credit problems that could result in rejection by Allstate include foreclosure, repossession, bankruptcy, a judgment against the applicant, a lien and a debt of more than $100 that has been turned over to a collection agency.

''We're not talking about someone who shows up for late-pay on a Sears credit card,'' said Edward Young, senior vice president of marketing administration.''We're talking about someone who's had a serious credit problem.''

Currently, if Allstate considers an applicant too high a risk, the company might offer them higher-priced auto insurance through Allstate Indemnity Co., which specializes in higher-risk drivers and cars.

A typical two-car family in Hartford paying $2,057 a year for Allstate's regular insurance would pay $3,178 for an Allstate Indemnity Co. policy, according to Jan. 1 prices compiled by the state Department of Insurance.

Local independent agents say insurers they represent seldom order credit reports on customers.

Insurers such as Aetna Life & Casualty Co., Metropolitan Property & Casualty Insurance Co. of Warwick, R.I., and Nationwide Insurance say they use credit checks for auto insurance occasionally.