Understanding Insurance Scores
An insurance score is a credit-based statistical analysis that helps predict a consumer’s likelihood of filing an insurance claim in the future. It is not a measure of a consumer’s ability to borrow money.The insurance score is one of the primary determinants in how much monthly premium a consumer will be assessed. Why do insurers use credit? Scores help streamline the decision process, so policies can be issued faster and at an appropriate price to the consumer. What variables are used to create an insurance score? It is calculated based on your credit score, your accident history, and your insurance history. When you apply for auto insurance, insurers will calculate your rates based on a number of factors — including your age, ZIP code and the make and model of your car. Some credit variables that are used include: outstanding debt ratio, new credit activity, types of loans, payment patterns, public records and past due amounts. How are insurance scores used? Decisions