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Why Your Insurance Company Checks Your Credit

November 16, 2009

Insurance companies discovered several years ago that people who are responsible about their credit are usually responsible about other things – including driving a vehicle. It’s a remarkably accurate predictor of future driving incidents. It doesn’t matter how much money they have, nor what their race or religion might be, nor where they live, nor their marital status. It just happens that people who pay their bills on time and are careful about their credit also tend to be careful about driving. They also tend to be more responsible home owners, protecting their investment by keeping up on a home’s maintenance needs and filing fewer insurance claims.

Since that discovery was made, most insurance companies have started including credit history–along with other factors such as driving history and type of vehicle for auto insurance, and a property’s characteristics and past claims for homeowners insurance – into their underwriting systems. It has become part of the formula companies use for classifying policyholders and setting insurance rates.

We encourage all our clients to be financially smart and savvy. This includes suggesting they check their credit histories from time to time to know how they rank and correct any errors. In the event that a person’s credit history has room for improvement, we can point you toward available resources.

Realizing that taking good care of your credit history is important. So too is recognizing that insurance companies differ widely in their approaches to credit, driving history and so on.
If you live in Oregon or Washington and want to see some of these comparative quotes for yourself, go to our website http://www.pacificinspartners.com/get-a-quote.php.

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