About Credit Scores

Understanding insurance scores

Unlike a credit score, which predicts future financial behavior, an insurance score predicts the probability of future insurance losses. Insurance scoring allows insurers to develop more accurate pricing for all risks, based on the likelihood of losses.

While consumer credit information is used to determine an insurance score, it does not measure an individual's income or credit-worthiness. Characteristics such as income, gender, age, nationality, marital status, religion, and ethnicity are NOT used to calculate an insurance score. Insurance score is only one component in underwriting and pricing.

Information Used in Insurance Scoring

• Outstanding debt
• Length of credit history
• Late payments, collections, and bankruptcies
• New applications for credit
• Types of credit in use

The model used to determine insurance scores evaluates overall credit patterns. This means that one or two minor late payments probably will not have a significant impact on your insurance score. However, an overall pattern of late payments probably will affect your score.

For more detailed information about credit scoring, read this report from EPIC Consulting, LLC: The Relationship of Credit-Based Insurance Scores to Private Passenger Automobile Insurance Loss Propensity (PDF)

 

How to Get Your Credit Report

Any consumer is entitled to one free copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian and Trans Union) annually. To order a free annual report from one or all national consumer reporting companies, visit www.annualcreditreport.com, call 877.322.8228 or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281. The form can be printed from ftc.gov/credit.

The Fair Credit Reporting Act requires that if you are declined coverage based on insurance score, the insurance company must notify you and give you the opportunity to obtain a free copy of your credit report. You can also purchase a copy of your credit report at any time at one of the three credit bureaus. Visit www.creditreport.com for details.