Insurers are increasingly using insurance scores when calculating auto insurance rates. The scores are calculated by credit bureaus and each insurance company that uses insurance scores has their own formula developed for them which is somewhat unique. While an insurance score is not exactly the same as credit score, credit is a component of the calculation.
Insurance scores use:
- Payment history: how well you have made payments on your outstanding debt in the past.
- The amount of debit you have outstanding. This includes credit cards, mortgages, loans and home equity lines of credit.
- When you established your lines of credit
- Applications for new lines of credit which may negatively impact you if you have too many recently opened lines of credit
- The mix of credit you have. For example, are there mortgages or more credit cards?
If you have been late on a few payments or have accounts in collection you may not receive the best rate from an insurance company which uses insurance scoring. It’s important to know that age, race, income, employment and interest rates do not affect the insurance score. You will find positive insurance scores among both rich people and poor people. It does not discriminate by income level.
Most but not all insurance companies use insurance scoring. Active Insurance works with many insurers who do not use insurance scoring. This means that if you do not have the best credit history you will still be eligible for the best rates from Active Insurance. This is one of the benefits of working with an independent agent like Active Insurance We can find the best rate for you, whether or not your credit is stellar.
Click here for more information about insurance scoring.