Credit Score vs Insurance Score: How Do They Differ?

Ever wondered why your insurance premiums were so high??   Not sure if it was due to the number of losses or from car accidents.  Although, your losses do account for a large portion of those high monthly and/or annual rates, there’s also a significant part that is related to your credit history.

First off, an insurance score is different than a credit score. Both are derived from your credit history (i.e. bankruptcies, inquiries, outstanding debt, number of credit accounts, etc). However, insurance companies go a step further by calculating your score then using a weight system to determine what items (on your report) is favorable or unfavorable.

To be clear, information like your age, gender, ethnicity, marital status and such is not used to determine the insurance score. But, when actuaries pull your credit report, they do take an assessment on how well that individual manages their financial affairs. With this being said, most insurers believe in the theory that people with low scores are more likely to file an insurance claim.

Stand clear of high insurance rates by, simply, maintaining a good credit score!