What Exactly Affects my Insurance Scores? And why does my Credit History Matter to Insurance Companies?
Your insurance score is a snapshot of how safe or risky you are to insure, and most insurance companies use it to help figure out your premium.
One of the factors used to figure out your insurance score is your credit history. To understand your score, you need to first understand your credit history.
Credit History
Your credit history is a thorough record of your financial data: your lenders (credit card companies, banks, etc.), credit limits (including any requests for limit increases), purchases, payments, as well as your outstanding debts and balances. Your payment history is also reflected in your credit history.
Credit Report
Your credit report compiles your credit history data, along with information gathered from credit card companies, banks, the court system, debt collection agencies, and similar public records.
Your report reflects a great deal of information, whether you’ve got a picture perfect financial history or one that includes challenges like liens and bankruptcy.
Account History
Your account history is a section of your credit report that contains exhaustive details about your credit and loan accounts, including your payment history.
For many companies, your account history is the most important part of your credit report. This is because it answers questions such as: How and when do you pay your bills? Do you pay on time? Do you pay the full amount? And do you carry a large debt in the face of a high credit limit?
What other factors go into my insurance score?
To get a complete picture, insurance companies look at all sorts of different factors. We never see your credit score, since we’re not evaluating your credit worthiness. We simply use elements that have proven effective in predicting insurance losses. Things like:
- Your payment history: Have you made late payments or missed a payment?
- Length of credit history: How long have you been using credit?
- Your current balance on each account compared to your highest balance: For example, if you had high credit card balances before are they lower now?
- Number of credit accounts: How many accounts do you have? This may include credit card accounts or installment loans.
- Credit inquiries: How often have lenders made inquiries into your credit report? This does not include “soft inquiries,” such as when a company reviews your credit report to make a promotional offer. (Credit inquiries are not used in all states.)
- Bankruptcies, foreclosures and other collection activity (Bankruptcy information is not used in all states.)
At Allstate, our evaluation system is one of the most sophisticated in the industry, which ultimately means we’re able to insure more people, and insure them well. It’s just one more way we’re working to keep you in Good Hands®