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Look....considering credit scores when setting insurance premiums may seem unfair. However, its like the weather. Its not very likely to be changed in most states.
Therefore, it makes more sense to work to improve your credit score if it is low. It can be done. I've met many who have succeeded in substantially raising their credit scores in just a year or two.
Look....considering credit scores when setting insurance premiums may seem unfair. However, its like the weather. Its not very likely to be changed in most states.
Therefore, it makes more sense to work to improve your credit score if it is low. It can be done. I've met many who have succeeded in substantially raising their credit scores in just a year or two.
It's actually one of the most reliable predictors of risk. the new scoring systems actually benefit those that are improving.
It's actually one of the most reliable predictors of risk. the new scoring systems actually benefit those that are improving.
Ya, well past performance by the credit scoring companies and insurers shows that they’re not actually interested in lowering rates or providing accurate information in the case of the credit bureaus. Every study I’ve seen shows that most consumer reports have at least one inaccurate negative entry on them.
Every time I’ve pulled my own reports I’ve found several inaccurate negative marks and getting that information corrected wasn’t always even possible. Last time I tried to even see my own credit report, I was “locked out” by a “security question” based on an an inaccurate entry - “how much was the monthly payment on xyz loan”, when I never took out “xyz loan”..
I’ve also experienced my rates /more than doubling/ overnight due to a bankruptcy 20 years ago in Michigan, probably at least part of the reason that credit-scoring models got banned there. This wasn’t comprehensive or even collision coverage, just the basic liability coverage required to drive a $500 car to work. Paying $100+ a month was a hardship, paying $200+ a month was an extreme hardship. This was with no tickets or accident history.
The states that banned credit-score models did that based on abuses by the same players mentioned here. “We’re gonna be good now” isn’t a convincing argument.
I'm not against credit or insurance scoring. I just know that there are people out there who suffer, and I'm not trying to make light of their situation.
When I returned to the United States in 2017, after 13 years abroad, all my credit information was gone. I convinced Utah Community Credit Union to give me a $500 credit card based on my smile and good looks and planned to spend several years working on rebuilding credit.
Then, I got someone to add me as an authorized user on a 3-year-old Discover card. I went from no score to an 817 overnight. On the strength of that, I got very cheap insurance (first with Bear River and then with Sublimity) and now I have adequate access to credit.
Obviously, I have to pay everything on time and be responsible. No one is saying that having mom & dad (or someone else) add you as an authorized user is going to be a panacea to all your problems. However, it does surprise me how many 21-25 year olds there are running around that have no credit, no inclination to build any, and no clue that this is the primary reason that their insurance rates are so high.
I worked on the rate calculation program for a large insurer. As I recall having a good credit rating got you a 15% discount and was one of the last factors applied to the formula, with variations by state. So like many things it's worded as a discount for a desirable attribute rather than a penalty to the base rate.
For teens the primary reason for high rates is simply lack of experience(# of years driving rather than a hard age so people who put off getting a license can still get dinged later in life).
The point you need to take into account is that credit overlaps with a lot of other areas. If a person gets a discount for a college education, a discount for a professional job, and a discount for credit, then credit cannot be a large factor because college educated people with good jobs tend to have good credit ratings.
By way of comparison, if the rating factor is simply number of years of driving experience, claims history, driving record, zip code, type of car, and credit-based insurance score, you can expect the score to be a very big factor in the rating.
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