What a credit-based insurance score is
A credit-based insurance score is a number built from information in your credit report. Insurers use it to help predict how likely a policyholder is to file claims. It's one factor among many, along with your home, your car, your driving record, your claims history and where you live.
How it differs from your credit score
Your credit score is designed to predict whether you'll repay a loan. An insurance score uses some of the same information, but it's weighted to predict insurance losses instead. Two people with the same credit score can have different insurance scores. Insurance scores also don't usually use your income, race, religion or address.
What usually affects it
- Your history of paying bills on time
- How much of your available credit you're using
- How long you've had credit
- Recent applications for new credit
- Collections, bankruptcies and other public records, where allowed
Where it's limited
States regulate how insurers can use credit. Some allow it with limits. A few ban or restrict its use for certain types of insurance, such as auto or home. Rules also change over time. Your agent can explain how it works where you live.
Does getting a quote hurt your credit?
Insurance quotes usually use a soft inquiry, which doesn't affect your credit score. Lenders don't see insurance inquiries the way they see loan applications.
How to help your score
Changes take time to show up. If your credit has improved a lot since you bought your policy, it may be worth asking for a new quote.
- Pay all your bills on time, even small ones
- Keep credit card balances low compared with your limits
- Avoid opening several new accounts at once
- Check your credit reports and dispute errors
- Keep older accounts open when you can
If life events hurt your credit
Some states let you ask your insurer to consider extraordinary life events, like a serious illness, a job loss or a divorce, that hurt your credit. Ask your agent whether that applies to you.
Compare carriers
Insurers weigh credit differently, so the same record can price very differently from one company to the next. CapCenter's in-house insurance agency has licensed agents who compare quotes from multiple carriers.