Insurance And Your Credit Report (Part I)

Insurance and Credit Reports (Part I)

More and more private car insurance companies and homes are looking for information about consumer credit to decide whether to issue or extend an insurance contract or which premium is required for this insurance policy. This booklet is intended to help you understand generally how your credit information is used to insure your car and owner personally and how this can affect your insurance purchases.

Is it legal for an insurance company to view my credit information without my permission?

Yes According to the Fair Credit Accountability Act (FCRA), insurance companies have a "legitimate purpose" to view your credit information without your permission. Insurance companies must also comply with government insurance laws when using credit information in the takeover and classification process.

Why do some insurance companies use credit information?

Some insurance companies believe that there is a direct statistical relationship between financial stability and losses. They believe that as a group of consumers with greater financial responsibility, they have fewer and cheaper losses and therefore have less to pay for their insurance. Instead, they believe that as a group of consumers with less financial responsibility, they lose more and more expensive and therefore have to pay more for their insurance.

Does the use of credit information discriminate against low-income users?

Insurers who use credit and business units that have developed a valuation model show that there is no difference in credit scores at various income levels because there are so many low-income users who are financially responsible as high-income and high-income consumers. In addition, these companies ensure that factors such as income, gender, marital status, religion, nationality, age and location of ownership are not used in the credit rating model. At the same time, these organizations do not investigate the factors that might appear neutral on their faces but have different impacts on the category of protected users. For example, some ranking systems indicate which sources of credit consumers use, and consumers who rely on financial companies and other borrowers can receive lower credit ratings. This can have a disproportionate impact on the minority.

What credit information does the insurance company use?

Although some insurance companies still see your actual credit report, most companies that use credit information use "credit ratings". Credit rating is a description of your credit worthiness. Insurance companies and organizations that have developed a rating model use several factors to determine credit results. Each factor is given a weighted number which, when applied and recorded in each credit information, is the last three-digit rating from 0 to 999, depending on the insurance company used and the ranking model used. In general, the greater the number, the more financially responsible the user is. Below is a list of the most commonly used factors:

- bankruptcy of the main negative elements, confiscation, retention, retention, compensation, etc.

- past payment history and frequency of late payments; the days that have passed between the due date and the late payment date.

- The duration of the credit history of the time spent in the credit system.

- Apartment property, whether you are the owner or owner.

- questions about the number of loans that you have recently requested for new accounts, including mortgage loans, electricity bills, credit card accounts, etc.

- Number of credit lines, principal loan amount, universal storage credit card, etc. What you have actually opened.

- Types of credit when using a basic credit card, credit card, financial loan, etc.

- Unpaid debt, how much you owe compared to the loan amount

How do insurance companies use loans?

Companies use loans in two ways:

Emissions - Decide whether you want to adopt a new policy or update existing policies. Some state laws prohibit insurance companies from refusing to issue new policies or update their policies that are based solely on information originating from your credit report. In addition, some state laws prohibit insurance companies from using your credit information as a single factor for the receipt and placement of certain companies within their group of companies.

Ranking - Determine what price you want to charge for your insurance by assigning it to a "level" or a certain category, or by assigning it to certain companies in their business groups. Some insurance companies use credit information along with other more traditional assessment factors, such as car records and claim history. Some insurance companies, if permitted by state law, can use their own credit to determine your interest rate.

How do I know if the insurance company is considering my loan?

Some agents and companies request your social insurance for "consumer information", "general information" or "office / insurance ratings". When applying for insurance, users must ask their insurance agent or company and how the credit information will be used in the acquisition and rating process.

Do you not have credit for purchasing my insurance?

Sometimes insurance companies find "no hits" or "no scores", which means that they cannot find a significant credit rating for you. This lack of credit information can occur: if you are young and have not made a credit history; if you don't believe in using credit and always pay cash; or if you have just become widowed or unmarried and all of your previous loan details are on behalf of your partner. If the insurance company does not find significant credit information for you, you can pay a higher insurance rate if such price increases are permitted under state law. Although many companies don't charge you the highest fees, you won't get the best price. If you know that you have a certain credit rating, contact your representative or insurance company to make sure you are using a social security number, date of birth, or other appropriate information to find your record.

What do insurance companies say is good creditworthiness?

"Good" rating varies from company to company. A good result is a number that matches the risk that your insurance company wants to receive with a premium. For companies you can get the best (lowest) rates with 750 points. For other companies, the same 750 may not be high enough to qualify for the best (lowest) level.

Should the agent or company tell me what my credit rating is?

Not. In fact, a company representative or insurance company might not even know your actual credit rating. Conversely, a company or model that uses a credit rating can only show that your results meet the requirements for a particular job or business in the group. Even if you know your credit worthiness, this might not work for you. Because the result is only a snapshot of your credit information for a particular day, your income can change at any time when your credit changes or the creditor's report is submitted to the credit bureau. In addition, insurance companies use various types of credit, so the results can vary depending on the insurance company. For example, a company can use three factor points (bankruptcy, valuation, and liens) and set weights for each factor. Other companies can use these three factors, but set different points and use two additional factors such as payment history and unpaid debt. Because the national credit bureau does not exchange information, the results may change depending on which national credit bureau reports the information contained in the ranking model.

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