It is true that some insurance companies rely much more on such information than others. However, besides age, gender, marital status and driving history, age of a home, age of a roof, construction of a house and prior claims history, a credit report tends to provide a snapshot of someone’s sense of responsibility, restraint, and temperance. Of course, this is all subjective and that is primarily what the continuing argument over using credit report data is all about.
Nobody ever said that the use of credit scores wasn’t controversial, because it most certainly is! Keep in mind that insurers are not looking for prosperity in these reports, but want to know how long you’ve been managing your credit and just how well you have done over a specific period of time.
Incidentally, someone with a less than perfect driving record and a pristine credit report could wind up paying less for their auto insurance than someone with a pristine driving record, but a blemished credit report.
The insurance industry, over time, has developed a sense of how credit scores and insurance risks effect one another and they utilize this relationship to determine whether or not they want to take someone on as an insured.
So, buyer beware, if you are in the midst of having some credit issues, now is probably not the best time to shop your insurance. Concentrate on improving your credit and then go shopping. Undoubtedly, you will be glad that you did!
By Karen Skoker, CPCU