Is Credit Score That Important?

Now more than ever, your credit score is a key component in determining your auto/home premium, and in some cases, whether you can even get a home policy.

If you’re like most, it is hard to understand the reasoning behind this.

Let me help-  Insurance companies use credit scores to help determine your financial ability to make payments on time, and the likelihood that you will make a claim.  The Fair Credit Reporting Act gives insurers the right to use credit reports as part of their underwriting process.

Studies indicate there is a correlation between an individual’s credit score and the cost to insure that person.  Statiscally, an individual who has a lower credit score is more likely to file claims than a person who has a higher credit score.

In the context of auto rating, the insurance company will review your overall credit score, plus your auto history. (tickets, accidents, claims frequency, etc.)  Therefore, expect to pay a higher premium, and in some cases, you may be denied coverage due to a very low credit score.

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