What Is an Insurance Credit Score?

The insurance industry uses your credit report to generate a unique score (called an insurance score) for their underwriting and claim management. Many auto and mortgage insurance companies look at your credit report, in part, to determine if you’re qualified for their lowest pricing plans.

They also look closely at recent financial stress that may hint at possible fraud. For instance, anyone maxed out on credit is more tempted to make a false insurance claim.  It’s also common for insurance companies to review a policy holder’s credit report for sudden financial stress, which may spur them to investigate any damage, theft, or lost item claim as possible fraud.

Your credit report always gets checked when you apply for life insurance over $150,000. And depending on applicable state laws, it can even prevent you from qualifying for insurance. Many people find this practice troubling.  Especially considering credit reports may have errors and identity theft is the number one complaint to the Federal Trade Commission. A growing list of states prohibits the use of your credit report for determining insurance rates.

SmartCredit® developed an Insurance Score that considers many factors insurance companies use to determine rates and possible fraud.  Our insurance scores range between 350 and 850, and the chart below shows how insurance companies may rate you:

• Ultra-Preferred (best possible rates & terms): 730-850
• Preferred (low-risk customer): 690-729
• Standard (average rates & terms): 650-689
• Mid-Market (underwritten with insurance & slightly higher rates): 600-649
• Non-Standard (high rates & strict terms): 550-599
• Sub-Prime (possible denial, difficult rates & terms):  350-549

SmartCredit.com includes this Insurance Score at no additional charge.  It’s an excellent way for you to track how insurance companies may judge your credit for your insurance rates or claims.

How should you prepare for an insurance application and get the best possible rates?
Be proactive!  Make sure your credit report is at its best before you apply.  Use SmartCredit.com to fix credit report errors, get goodwill corrections, replace lost or stolen credit cards, and report possible identity theft. Our Action Buttons make it fast and easy.

David B. Coulter – founder and C.E.O. of SmartCredit®

Categorised in: Credit Report, Credit Score, Improving Credit, Insurance, Money & Identity

This post was written by David B. Coulter