Credit History & Insurance
By OnlineInsurance.net
In the last few years there have been many insurance companies that have began to use credit information so they can determine what people will pay for their policy. It is a fact that in excess of 90% of insurance companies use credit scores: this is according to a study performed by Conning Research and Consulting Inc., which is a research firm based in Hartford Connecticut. In order for you to better understand how your insurance score, based on your credit history, is calculated and how it impacts the amount you pay on your insurance policy, you should review the following list of questions that are asked often. You should know that the use of insurance scores differs from state to state.
What is an Insurance Score?
By reviewing a consumer"s credit history a person"s insurance score is determined. This analysis is done with a computer model that has been carefully developed and tested. The computer model will review such information as payment history, if you have filed for bankruptcy, if you have collection agent bills, if you have any outstanding debts, and how long your credit history is. Unlike a “credit score” which is generally used when you are trying to procure a loan, insurance companies look at an insurance score so they can come up with the best price available for your policy.
When your insurance rate is calculated insurers will usually group consumers into various categories. For instance, the most often used categories that will help calculate the cost of someone"s auto insurance policy are age and driving record. An insurance score is simply another method that insurance companies use in order to see what you will be paying for your policy.
There has been extensive insurance research, as well as independent research, that has shown that individuals with various credit history patterns that result in having a lower insurance score will be more likely to have claims that have to be paid by their insurance company. For example, if you keep the credit card balances you have below the maximum limit and you keep up with regular payments, paying on time, the higher your score will be. However, if you tend to “max-out” your credit cards to their limits and pay your credit card bills late, you will have a lower score.
An insurance score only reviews the credit history you have and does not take into account such things as your race, where you are from, where you live, if you re married, gender, religion, or income.
Why do Insurance Companies use Insurance Scores?
Considering that it has been proven that insurance scores predict for losses in the future they can greatly help insurance companies find out how likely it is if a person will file an insurance claim. Because of this it lets insurance carriers to set rates that are correct and appropriate for each and every customer. This allows insurance carriers to offer insurance coverage to a wider range of customers. Also, it is beneficial to many of these customers, in terms of insurance scores, taking the form of lower prices for insurance policies.
Insurance scores are used much like factors of traditional underwriting. Individuals that have credit history patterns, as a group, will get insurance scores that are lower and they have more of a chance to see a loss and then file an insurance claim. These people are then charged a higher premium because they are more likely to be an insurance risk. What this does is allow for insurance companies operating over the Internet to offer more attractive rates to people that have insurance scores that are higher and therefore, less likely to file an insurance claim.
The credit history of an individual can help predict losses in the future. However it is not the only factor that is used to come up with the cost of your insurance policy. It is only one factor out of several that is used in order to come up with the best possible rate for the policy. Two other important factors also used to come up with a rate are a person"s age and their history of filing claims.
What Sort of Information Affects my Insurance Score?
There is various information that is reviewed when insurance companies determine your insurance score. Some information that is reviewed is your payment history, length of your credit history, and amount of your debt in terms of your credit limits, various types of credit you use, new credit applications that you have asked for, bankruptcy, foreclosures, and other types of collection activity.
How do Insurance Companies operating on the Internet use my Insurance Score?
Online insurance carriers use your insurance score and various other factors, such as the ones mentioned above, in order to find out the best level of insurance pricing that you can receive. Typically customers that have insurance scores that are high and do not have any past insurance claims or car accidents, will be qualified for the best price possible for their insurance.
For customers that have filed insurance claims or had car accidents in the past their high insurance score will help them be qualified for a more attractive rate than a customer who has a much lower insurance score. Because of this customers that have not filed insurance claims or have had any car accidents, but do have insurance scores that are low, can still qualify for a competitive rate.
Considering that My Credit History Information is Personal How Do I Know it will not be Misused?
There are many laws, both federal and state, and regulations that are specifically in place to protect you. Under federal law, if your credit history information happens to result in an "adverse action" by an insurance company then the company is required to contact you and let you know how you can get a copy of your credit report free of charge. Also, you will be given a description of your right to dispute if the information in your credit report is not accurate or incomplete.
Will my Insurance Agent be able to Access my Credit Report?
No they cannot. Your overall score will be given to your agent when the policy proposal is created. However your agent will not have access to any type of information that would be used to calculate your score.
Can I Improve My Insurance Score?
Yes you can. One of the better things you can do in order to improve your credit scores is to make sure to pay your bills on time. Little by little over time this will help improve your credit score. Also you can look over the amount of credit that you have. Is your credit card up to its limit? If it is it can be seen as a negative factor. Try to determine how you can lower the debt you have without having to add to your credit activity. You can also look over your credit report periodically to find out if it is correct. You can request a copy from several resources such as the American Insurance Association (www.aiadc.org). Resources such as this can give you helpful information on how you can improve your credit score. You can click here in order to view a list of ways to improve the insurance score.
If you need more specific information about insurance scores you can check out the Insurance Information website www.iii.org. This website has a lot of specific information on insurance scores under the link "Credit Scoring." The website also has other links to various other helpful resources.
What is an Insurance Score?
By reviewing a consumer"s credit history a person"s insurance score is determined. This analysis is done with a computer model that has been carefully developed and tested. The computer model will review such information as payment history, if you have filed for bankruptcy, if you have collection agent bills, if you have any outstanding debts, and how long your credit history is. Unlike a “credit score” which is generally used when you are trying to procure a loan, insurance companies look at an insurance score so they can come up with the best price available for your policy.
When your insurance rate is calculated insurers will usually group consumers into various categories. For instance, the most often used categories that will help calculate the cost of someone"s auto insurance policy are age and driving record. An insurance score is simply another method that insurance companies use in order to see what you will be paying for your policy.
There has been extensive insurance research, as well as independent research, that has shown that individuals with various credit history patterns that result in having a lower insurance score will be more likely to have claims that have to be paid by their insurance company. For example, if you keep the credit card balances you have below the maximum limit and you keep up with regular payments, paying on time, the higher your score will be. However, if you tend to “max-out” your credit cards to their limits and pay your credit card bills late, you will have a lower score.
An insurance score only reviews the credit history you have and does not take into account such things as your race, where you are from, where you live, if you re married, gender, religion, or income.
Why do Insurance Companies use Insurance Scores?
Considering that it has been proven that insurance scores predict for losses in the future they can greatly help insurance companies find out how likely it is if a person will file an insurance claim. Because of this it lets insurance carriers to set rates that are correct and appropriate for each and every customer. This allows insurance carriers to offer insurance coverage to a wider range of customers. Also, it is beneficial to many of these customers, in terms of insurance scores, taking the form of lower prices for insurance policies.
Insurance scores are used much like factors of traditional underwriting. Individuals that have credit history patterns, as a group, will get insurance scores that are lower and they have more of a chance to see a loss and then file an insurance claim. These people are then charged a higher premium because they are more likely to be an insurance risk. What this does is allow for insurance companies operating over the Internet to offer more attractive rates to people that have insurance scores that are higher and therefore, less likely to file an insurance claim.
The credit history of an individual can help predict losses in the future. However it is not the only factor that is used to come up with the cost of your insurance policy. It is only one factor out of several that is used in order to come up with the best possible rate for the policy. Two other important factors also used to come up with a rate are a person"s age and their history of filing claims.
What Sort of Information Affects my Insurance Score?
There is various information that is reviewed when insurance companies determine your insurance score. Some information that is reviewed is your payment history, length of your credit history, and amount of your debt in terms of your credit limits, various types of credit you use, new credit applications that you have asked for, bankruptcy, foreclosures, and other types of collection activity.
How do Insurance Companies operating on the Internet use my Insurance Score?
Online insurance carriers use your insurance score and various other factors, such as the ones mentioned above, in order to find out the best level of insurance pricing that you can receive. Typically customers that have insurance scores that are high and do not have any past insurance claims or car accidents, will be qualified for the best price possible for their insurance.
For customers that have filed insurance claims or had car accidents in the past their high insurance score will help them be qualified for a more attractive rate than a customer who has a much lower insurance score. Because of this customers that have not filed insurance claims or have had any car accidents, but do have insurance scores that are low, can still qualify for a competitive rate.
Considering that My Credit History Information is Personal How Do I Know it will not be Misused?
There are many laws, both federal and state, and regulations that are specifically in place to protect you. Under federal law, if your credit history information happens to result in an "adverse action" by an insurance company then the company is required to contact you and let you know how you can get a copy of your credit report free of charge. Also, you will be given a description of your right to dispute if the information in your credit report is not accurate or incomplete.
Will my Insurance Agent be able to Access my Credit Report?
No they cannot. Your overall score will be given to your agent when the policy proposal is created. However your agent will not have access to any type of information that would be used to calculate your score.
Can I Improve My Insurance Score?
Yes you can. One of the better things you can do in order to improve your credit scores is to make sure to pay your bills on time. Little by little over time this will help improve your credit score. Also you can look over the amount of credit that you have. Is your credit card up to its limit? If it is it can be seen as a negative factor. Try to determine how you can lower the debt you have without having to add to your credit activity. You can also look over your credit report periodically to find out if it is correct. You can request a copy from several resources such as the American Insurance Association (www.aiadc.org). Resources such as this can give you helpful information on how you can improve your credit score. You can click here in order to view a list of ways to improve the insurance score.
If you need more specific information about insurance scores you can check out the Insurance Information website www.iii.org. This website has a lot of specific information on insurance scores under the link "Credit Scoring." The website also has other links to various other helpful resources.
