Your Credit History and How it Affects Your Premium
Recently, many insurance companies have started using a credit based insurance score as part of their underwriting and/or rating process. Studies have shown that these scores help companies predict insurance losses more accurately. By predicting potential losses, we can provide a more appropriate rate for each policyholder.
What is an insurance score?
An insurance score is determined by reviewing a consumer's credit history. A carefully developed and tested computer model performs the analysis. Goodville Mutual is using a model developed by LexisNexis Risk Solutions, Inc.
How is my credit based insurance score developed?
There are many factors that are reviewed including:
- Amount of outstanding debt
- Late payments, collections, bankruptcies
- Length of credit history - how long accounts have been established
- Type of credit - credit cards, home or car loans
- Availability of credit - are you 'maxed out' or are you well within your limits?
- New applications for credit
What is not included in my score?
- Gender
- Marital status
- Age
- Nationality or ethnic group
- Address
- Income
- Religion
- Any factors prohibited by law
Is my insurance score different from a credit score?
Yes - insurance scores are different from your credit score. Both scores use computer models to analyze data from your credit history. However, the credit score is used by banks and financial institutions to determine eligibility for and interest rates for car loans, mortgages and credit cards.
Insurance scores analyze certain characteristics of your credit history as a predictor of losses. Your score will help us to determine the best price available for your policy.
Since these scores are designed to measure different outcomes, they may show different results. A file that reveals a strong financial credit score may not always show an equally strong insurance score and vice versa.