Have you ever applied for a loan or credit card? Rented an apartment or obtained utility service? If so, you know your credit history is very important. The information contained in your credit report can have a major influence over many parts of your life, including your auto and homeowners insurance. As allowed by law, many insurance companies use a credit-based “insurance score” when evaluating insurance applications or policies. This brochure was designed to give some answers to questions about insurance scoring, including how and why it is used.
What is a credit-based insurance score? Why do insurance companies use them?
A credit-based insurance score uses information from your credit report to help predict how often you are likely to file claims, and/or how expensive those claims will be. Studies by federal and state regulators, universities, independent auditors and insurance companies have proven that credit characteristics are predictive of certain outcomes, such as insurance loss. The way you handle your credit says a lot about how responsible you are. Insurance companies want to reward responsible people by making sure you don’t pay more than you should. That’s why insurance scores are so useful.
Continue reading to find out how this affects your insurance.Read More