What is Insurance Score Credit Rating?



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. 
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Common Questions

What does my credit history have to do with how I drive my car?

What if I'm buying a house?

Does this inquiry affect my credit rating?

Can my insurance score help me save money on insurance?

Yes. Credit-based insurance scores allow companies to
charge lower premiums to customers who are better risks.
For example, people with better insurance scores and a
good driving record could qualify for a better auto
insurance rate.
How Does it Affect Me?

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 andinsurance 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.
It is important to understand that an insurance score is not the same thing as a credit score. Both are derived from data found in your credit report, but they predict very different things. A credit score predicts how likely you are to repay a loan or other credit obligation.

When you are applying for a loan for example, the bank will consider your credit history as well as other factors, such as income - which insurers do not consider  in determining whether you are likely to repay your debt.  When you apply for insurance, the insurance company orders credit information from one or more of the three major U.S. credit bureaus.

This information is entered into a computer program that generates an insurance score.  Most of these programs, or models, look at things like payment history, collections, credit utilization and bankruptcies. For example, if you have never been late paying your mortgage, you will probably have a better score than a person who pays late. If you have maxed out credit cards, that will negatively affect your score.
What is a credit-based insurance score? Why do insurance companies use them?