Find an Agent


Get an Insurance Quote Now! Online or directly with a Member Agent.

Search Blog

Enter Keyword
Filter by Category

How does credit affect insurance rates?

Most auto and homeowners insurance companies use a type of creditscore, known as an insurance score or a credit-based insurance score, todetermine a policy cost and terms.

Why do Insurance Companies have to pull my credit report?
Like it or not, insurance companies may use your credit information to determine if they are willing to offer you a homeowners or auto policy and how much that will cost. How much weight, if any, your credit has on your insurance premiums varies by insurance company and by state regulations, but if your credit score is very good, there’s a pretty good chance you will pay less for insurance than your lower credit-rated counterparts.

Financial Scores versus Insurance Scores
Your financial score, or credit rating, and your insurance scores are not one and the same. Credit ratings are used to calculate the likelihood of repayment of a loan based on your financial history, and include factors such as outstanding debt, bankruptcies, length of credit history, collections, new applications for credit, number of credit accounts in use, and timeliness of debt repayment.

An insurance score, while based off certain elements that produced your credit score, is used by underwriters as a predictor of insurance losses or claims. Insurance companies may produce your score using their own methodology or may use one calculated by a company such as Fair Isaac Corporation (FICO) or LexisNexis. Whatever the method, a credit-based insurance score helps underwriters discern between lower and higher insurance risks and charge premiums accordingly. Statistically, people who have a poor insurance score are more likely to file a claim and incur greater losses, while those who have a favorable score tend to be more responsible drivers and homeowners.

What type of credit information affects my insurance score?
Again, while not every insurer evaluates your credit using the same method, your insurance score is typically created using about 20 to 30 pieces of financial data, including your debt, the length of your credit history, and your payment history. In fact, two items, your payment history and debt, make up the bulk of what factors into your credit-based insurance score. What is not factored into your insurance score? Income. Be warned! Even if you can well-afford to pay back that large loan, your insurance company may charge you higher premiums just for borrowing!

How can I improve my insurance score?
Primarily, you must take steps to maintain an excellent credit rating. Paying your bills on time and keeping your credit card use in check will help you improve your credit score over time and obtain more favorable insurance rates in the future. You can check with your state’s insurance department to better understand how an insurance company can use your credit to determine your premium and the regulations they have to abide by.

It is important to remember that credit-based insurance scores are not the only determinants in evaluating risk and establishing rates. For instance, car insurance rates are also influenced by your age, driving experience, how your vehicle is used, driving and claims history, the make and model of your vehicle(s), and your geographic location. Homeowner rates are calculated using factors such as the home’s age and construction, location, and claims history.

Regardless or your credit rating or insurance scores, consumers should always research various options when determining the best coverage for specific needs. This insurance shopping process works best when working in conjunction with your independent insurance agent, a trusted advisor for all your present and future insurance needs. By representing multiple insurance companies, they offer more choices, creating a better value for your investment.

The information on this site is general in nature. Any description of coverage is necessarily simplified. Whether a particular loss is covered depends on the specific facts and the provisions, exclusions and limits of the actual policy. Nothing on this site alters the terms or conditions of any policies, nor does it provide any guarantees. You should read your specific policy for a complete description of coverage.


Share Blog Post


Comments (0)

Page 1 of 1First   Previous   Next   Last   


I’m a small business owner. Do I really need Cyber Insurance, and how do I know what coverages to purchase?

What you should know about the risk, coverages, and cost before you purchase cyber insurance.

5 Signs You May Need a (New) Insurance Agent

Worried your insurance agent may not be up to the task? Here are a few red flags that you may need a new one.

What is Firearms Liability Insurance and do I need it?

A look at the financial exposures when a law-abiding citizen is actually forced to use a gun to protect his/her self, a loved one, or their personal property

Is Primary Flood Insurance Enough? Maybe Not.

What is excess flood insurance and what you need to know about this unique product. 

Identity Theft: How to Protect and Detect

We have become so used to everyday conveniences - public Wi-Fi in our coffee shops, malls, airports and restaurants; banking in the palm of our hand and access to shopping at any hour. The on demand world we live in can be beneficial and time-saving, but can also severely damage our identity including our finances, credit and more. It’s crucial to have a plan in place for protecting your identity with active monitoring to detect any suspicious activity before it can cause long lasting effects.

Thanksgiving - a Time for Family, Turkey and… Household Fires?

The threat of fires in the kitchen triples on Thanksgiving Day. Keep your family, your home and your bird safe from harm.

Cyber-attacks and Data Breaches. Not Just for Big Businesses.

Did you know 60% of all cybercrime is directed at small businesses? In fact, According to the National Cyber Security Alliance, one in five small businesses falls victim to cybercrime each year. And of those, some 60 percent go out of business within six months after an attack.

Insurance Life Cycle Infographic

An infographic on the insurance you need for each life event

5 Ways to Lower Insurance Costs for Teens

Sticker Shock when insuring a teen driver is common, but how can you and your teen save?

What You Need To Know About a BOP

Are you a business owner? Are you, your business and employees properly insured? Learn what a BOP is and what insurance you need for your individual business.

Is umbrella insurance right for you?

Why put your assets at risk? With an umbrella policy you can protect yourself and your family with a minimal investment.

Moving soon? Why you need renters insurance!

Renters insurance covers more then just your personal belongings.

Do you have your auto insurance and home insurance through the same company? There’s a discount for that!

Get insurance discounts by bundling your home and auto coverage plus…

Why do I need to inventory my property?

Do you keep a home inventory list? These apps will help you file an insurance claim when unforeseen events occur.

Summer is in full swing – are you getting the most out of the boating season?

Boaters would argue that they take better care of their boats than do car owners of their vehicles. Are you one of them?

How does credit affect insurance rates?

Most auto and homeowners insurance companies use a type of creditscore, known as an insurance score or a credit-based insurance score, todetermine a policy cost and terms.

4 Must Know Insurance Terms

Insurance Terms 101: Why do I need to know insurance terms?

First time home buyer? Here are some tips for finding the best homeowners insurance.

Did you just buy your first home? You may have auto insurance and renters insurance, but now you need homeowners insurance. In fact, it's a requirement when purchasing a home.

Does Your Insurance Agent Have a Mobile App?

A well designed mobile app from your insurance agency can be a great tool to make your insurance life easier!

Do You Track and Document Your Home Improvements and Repairs? You Should!

Is your homeowner's policy up for renewal? Don't forget to track and document all your home improvements and repairs!

Page 1 of 4First   Previous   [1]  2  3  4  Next   Last   
Home | Why Us | Insurance Types | Blog | Terms | Privacy | Webmaster
© 2021 SIAA Marketing, LLC.