Why Is Your Credit Score Important To Insurance Companies
The reason insurance companies check your credit is because your credit score is a good indication of your financial stability and credibility (though not all the time). All insurance – be it homeowner’s, life, health, or automobile, is based on statistics and risk management. Based on these statistics, insurance companies have found that the lower a policy holder’s credit score is, the more likely they are to file claims, exaggerate claims, commit insurance fraud, or be late on payments. Like it or not, your credit score is an essential piece of information to insurance companies.
By all means, having a low credit score does not make you a criminal. Just because you have poor credit does not mean you will commit insurance fraud or be a liability to your auto insurance company, it just means that you will be grouped with other individuals who have poor credit. Do not take it personally. Remember, insurance scores are not there to predict your behavior; they are there to predict the behavior of a group of people with similar credit histories.
Generally speaking, a good credit score is defined as one above 700. Let’s take a look at what Experian.com says about good credit:
A “good” credit score depends on the scoring system used by your particular lender. Different scoring systems use different scales. However, if you have a good credit score from one of the credit reporting agencies, you are likely to have a good credit score with your lender.
- Most credit scores fall between 600 and 750
- A score above 700 usually suggests good credit management
Source – Experian.com
A bad credit score is typically below 600. If credit was the only factor insurance companies looked at, people with credit scores of 700 and above would always pay less than people with scores of 600 and below, and this is not the case. There are good and bad apples in every group. Just because someone has a good credit score does not mean they won’t commit insurance fraud or submit bogus insurance claims.
How To Find Out Your Credit Score
To make sure your credit score will not negatively affect your auto insurance costs, you should obtain a copy of your credit report. If you are in the United States, the Fair Credit Reporting Act says that you are entitled by law to receive one copy of your credit report each year. A quick Google search for “free credit reports” will put you in touch with many of these companies that will run a credit check for you. Alternatively, you can find information about your credit score directly from one of the three major credit-rating agencies – Transunion, Equifax, and Experian.
Where To Find An Insurance Company That Does Not Do Credit Checks
Most insurance companies will want to know your risk level before they offer to insure you. There are some companies, however, that will never do a credit check on you. If you are concerned that your credit score will negatively affect your insurance premiums, you should get a quote from one of these companies.
If you are in the United States, you can use our quote form at the top of this page to get no credit check auto insurance quotes. To find additional companies that won’t check your credit, you can contact your state’s insurance department for more suggestions. As of 2019, insurance companies such as Allstate and Progressive have been known to not use credit checks in determining premiums. Their algorithms are always changing, however, so it’s best to check with them first to make sure.
In general, if a company asks for your social security number (SSN), they are most likely going to run a credit check on you. Because we value your privacy, 4AutoInsuranceQuote.com will never ask for your social security number when calculating your auto insurance quote. To begin your search for the best auto insurance prices without having to subject yourself to a credit check, scroll back up to the top of this page and enter your zip code to begin.