Do You Know Your Insurance Score? Why You Need To

25 April 2016
 Categories: , Blog


If you need auto insurance, you need to know your insurance score before you get started. This score can make a difference in your premiums. Below is some information about what an insurance score is, how your insurance company determines your insurance credit score, and some ways you can improve it so you can have lower insurance premiums.

Insurance Score and Credit Score

An insurance score is not the same as a credit score. The insurance company determines your insurance score by getting information from your past policyholders. They look for information like your payment history, your accident history, and your insurance claim history.  There are claim database insurance companies can find a lot of information on about your claim history also. They will look into your driving record to see how many accidents you have been in and how many speeding tickets you have had.

The insurance company will also use your credit score to determine how likely it is that you will file a claim, which will affect your insurance score.

Credit Report Factors That Go into Your Insurance Score

Your insurance company calculates your insurance using your credit report. Some of the information that they look for include:

  • Age of credit history
  • Credit card utilization
  • Number of credit accounts
  • Payment history

Some insurance companies use their own scoring model from other providers like a credit bureau or FICO.

Improving Your Insurance Score

The best way to improve your insurance score is to improve your credit score. Some ways you can do this include:

  • Pay your bills on time
  • Limit the number of credit cards you have in your name
  • Pay down existing debt
  • Work with your creditors and resolve your outstanding balances
  • Do not let any accounts go into collections
  • Look at your credit report regularly

If you need help in increasing your credit score, you should consider hiring a financial advisor.  Once you improve your insurance credit score, talk with your insurance company. They may agree to lower your premium rates.

Monitor Your Credit

If your credit score goes down after you purchase insurance, it can affect any future premiums. For example, if you have any policy that expires and you renew it, including your homeowner's boat, car, etc., the insurance company may review your score again and raise your premium.

Not all insurance companies work the same, so make sure you talk with your insurance company about how they determine your insurance score. They can also give you some tips on how you can raise it.

For more information, contact Northeast Insurance Agency or a similar company.