I've had a few calls of late regarding insurance and credit. Here's how it works, it would appears that according to the fine folks in the insurance industry, if you have a lower credit score, they believe you are a higher risk. That's right, not only do we get to pay more for interest, but we also get to pay more for insurance.
Basically, payouts from insurance companies are up dramatically for folks with lower credit scores. Does that mean if you repair your credit you become a better driver? Good question. Perhaps there is less on our minds when we have a good credit score? Perhaps life is just a bit easier when we have a good credit score? More stress presumable equals more risk? That's a question for folks much smarter than my self.
Here's how it works:
Consumer Reports sought and obtained scoring models filed with regulators in Florida, Michigan, and Texas used by 9 of the 10 largest U.S. auto insurers. CR found that there are no standards. Each company uses different models and weighs different credit-report information. Some big companies find scoring useful only for new customers, not renewals, while others may use it for both. Moreover, CR notes that the credit data from which the scores are derived have a reputation for being inaccurate and out of date.
Regardless, this is how we are judged. And here's the numbers...
I don't like it any more than you do. Get your score up, and pay less for life in general.
Ed-Jack Dvorak is National Affiliate Liaison at Credit Dr., a national credit restoration company. He works with clients and creditors to improve credit profiles.