» Insurance Coverage Advices » Introduction to Insurance Scores

Introduction to Insurance Scores

You credit score affects not only lenders' decision whether to approve your loan application but also the insurance rates and products that will be offered to you. This is made possible due to insurance scores. You may not get insurance in case your credit is not good in the most extreme case, which means that you may not be able to use some of the offered products.

If you have a high credit score, the lending company will consider you less risky as a client. They will be willing to give you greater loans and more favorable terms as compared to lower credit scorers. The system that the lending industry has developed allows them to determine the probability that a borrower will not be able to stick to his/her payment schedule.

Insurance companies have also followed this practice. The credit related information is used as a gauge on your potential profitability as a client. Insurance scores are developed as result, which facilitate the judgment on the potential client.

Thus, a bad insurance score may result in higher costs to you. Additionally, a change in your insurance score for worse may result in a change in the rate or denial of a product.

However, there is no way in which you can understand the way an insurance score functions. It includes a lot of information which is extracted from your credit report and a variety of other sources. Special software processes the information to result in your insurance score.

There are no exact guides on how to improve your insurance score. However, since the information used in the insurance score comes from your credit report you can apply the same tactics as the one applied for a credit report improvement. For example, you should make timely payments, as well as you should not incur any tax debts or bankruptcies. The length of time you have held an account will also play a role.

Rate this article : Low
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5