Like a credit score used by banks, insurance scores rate your risk (how financially stable you are) since research has shown that people who are in better shape credit-wise tend to file fewer insurance claims.
What It’s Based On
Your insurance score takes into account factors such as:
- your credit history
- the number of claims you’ve filed in the past
- where you live and drive
- what kind of house or car you own
It’s a calculated number, with no single negative item necessarily stopping you from receiving the best rates. If you’re a better risk (based on your insurance score) and have a good driving record, you may qualify for a lower premium.
Who Uses It
Not all insurance companies rely on insurance scores or may use it only when you initially apply. Others may reapply it after a period of years. You have a right to know when and how it is used.
How To Improve It
Protect your credit:
- pay bills on time (loans and credit cards)
- review your credit report annually and correct any errors
- watch your debt ratio (the percentage of your income you use to pay your debts)
And think “safety”: reduce the risk of filing insurance claims by driving safely and taking any necessary precautions at your home to eliminate or decrease the odds of adverse events.
How To Find It
Check out these sources for more about insurance scores and to review your consumer files.
For credit history reports: According to the Fair Credit Reporting Act (FCRA), you are entitled one free copy of your consumer file from certain consumer reporting agencies during each 12-month period. Go here to request your report.
Contact information for the three credit bureaus:
- Equifax: 800-525-6285
- Experian: 888-397-3742
- TransUnion: 800-680-7289
For claims history reports:
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