|
|
|
|
How Your Credit Affects Your
Insurance Rates
|
In the good old days, credit
reports were used in the insurance industry only for rating homeowner's
insurance premiums. Over the past few years, credit scores have taken a
much larger role in the underwriting of insurance. Now, credit scores
affect most Property and Casualty lines of insurance, such as auto,
motorcycle, and commercial insurance (in most states). Even if you've
never had a ticket, accident or claim, you could be paying high risk
premiums because of your credit score. How did this happen? Credit
reporting agencies and insurance companies ran statistics and determined
that people rated as financially responsible are less likely to file
claims against their insurers. |
|
Different insurance companies have different
credit guidelines, so one company could label a person as an "unacceptable risk"
and another company could label that person a "superior risk". There are very
few preferred risk auto insurance companies that do not use credit scoring
to underwrite insurance. Even the number of high risk insurers that don't use
credit scoring is quickly diminishing. (Note: high risk companies do not decline
applicants based on credit, but credit rating does affect the
premium.)
Credit Factors That Could
Affect Your Insurance Premium
| Bankruptcy |
Foreclosure |
| Reposession |
Judgements |
| Collection Accounts |
Late Payments |
| High Credit Card Balances |
Too Many Credit Inquiries |
| Insufficient Credit History |
Tax Liens |
Since this article was written, credit scoring for auto
insurance has been outlawed in several states. Check with your state insurance
department to see if credit scoring is used in your state. For more info on
insurance credit scoring, visit InsuranceScored.Com.
|
|
|
Copyright © 1998-2008 Consumer City.org |