How do insurance companies decide on your numerical insurance rating, and how can you obtain this info?
January 17th, 2009 | by Rick |
Jane A asked:
I understand that insurance companies use credit scores for this purpose, but I have been unable to get them to tell me which credit scores result in a specific numeric rating. Since the price of my insurance policy is tied to this information, I believe this information should be made available to consumers.
PERCY
I understand that insurance companies use credit scores for this purpose, but I have been unable to get them to tell me which credit scores result in a specific numeric rating. Since the price of my insurance policy is tied to this information, I believe this information should be made available to consumers.
PERCY
2 Responses to “How do insurance companies decide on your numerical insurance rating, and how can you obtain this info?”
By ERROL on Jan 17, 2009 | Reply
ELI
Some insurance companies have their own credit scoring models while others base theirs off your FICO score. Many companies consider their actual rating models to be proprietary although they do have to disclose a large amount to state regulators in order to get their rates approved and to demonstrate that their credit-scoring method is not discriminatory.
If you call your insurance company and they use credit, in part or in full, to determine your premiu, in all states (I believe) you are entitled to a copy of the company’s decision and what it was based on. For example, this decision might look like this:
* Your credit score was lowered because you had too many accounts opened
* Your credit score was raised because you have no accounts in default
* … [you get the picture]
In auto insurance you will find that the big guys like GEICO, Progressive, and Allstate will be only too happy to provide you with this information. As you move down the food chain to smaller and smaller companies though the chances are that they don’t have it or don’t use credit. Building a credit model is expensive (think millions of dollars) so not every company uses credit.
By VITO on Jan 19, 2009 | Reply
WYATT
That’s because it varies from one company to the next - they don’t all use the EXACT same scoring process, and the scoring process they use is proprietary - in other words, knowing what the number is doesn’t do you any good, as it could be completely different with a different company.
You can’t get your “score” number with a particular company. You can, however, request a copy of your credit report every year, at to find out what the things are that could be hurting your score.