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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.

 

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