Simply Insurance 101: How Your Credit Affects Your Insurance Score
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Posted by Lisa D., Mike F. on November 12, 2015 in Acuity Focus

After receiving an online insurance quote for your auto, home, or package policy, the premium estimate may look like a random number, but it is anything but. Many factors go into determining the cost of your insurance. The make and model of your car, the size of your house, the type of home you own, the deductibles you select, your coverage limits, your accident or claim history, and your credit history all play a role. Credit history is a factor that many people do not understand. We often hear the question, "What does my credit have to do with insurance?”

 

The answer is pretty straightforward. How you handle your credit is an accurate predictor of future claim filing. In many cases, a positive credit history leads to lower insurance costs! Your credit history is transferred into an insurance score, which provides an objective decision making tool for insurance providers. 

 

An insurance score provides an assessment of your insurance risk at a particular point in time. The score is developed from specific credit information that reflects credit management patterns, such as collections, bankruptcies, outstanding debt, length of credit history, types of credit in use, and the number of new applications for credit. Keep in mind that insurers are only interested in how well you handle your assets—not how much money you make or whom you owe.

 

Numerous independent studies have proven that there is a strong connection between an individual’s insurance score and the likelihood of that person filing a claim. So, if you are less likely to file a claim, shouldn’t you pay less for your insurance? We think so too!

Lisa D.
Lisa D. has over 14 years of experience in the auto insurance industry, including 12 years at ACUITY. She obtained her P&C license and sold personal insurance for two years before starting at ACUITY, where she focuses on researching new auto coverages, helping with the auto pricing system, and leading auto insurance-related projects. On top of that, Lisa has her Association in General Insurance (AINS) and Associate in Personal Insurance (API) designations. Outside of work, Lisa enjoys cooking, photography, and spending time with her family. The last two go hand in hand, as she takes pictures of her kids every day.
Mike F.
Mike F. knows ACUITY and insurance inside and out. He has more than 36 years of insurance industry experience, including 29 years at ACUITY. His expansive knowledge of home insurance makes him a valuable resource. One of his favorite things about the insurance industry is helping people recover from low points in their lives and getting them back on their feet. If he is going on a trip, you’ll likely find him somewhere warm and sandy


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