Will My Credit Rating Change My Insurance Rates?

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Recently, we were asked this question by one of our Mason-McBride clients, and we thought we would share the answer with our readers.

Many things go into homeowners and auto insurance rates, one of them being credit. We’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting. Some people have no idea that it’s used in the rate at all.

At the end of the day, though, there’s not much we can do about it. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.

By the way, insurance companies don’t pull your credit like a mortgage company, or credit card company does. There is no negative impact on your credit due to an insurance company looking at it. When we say “pull,” we mean that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).

Does Credit Play a Role in Insurance Rates?

It’s important to understand that insurance companies don’t continuously check or monitor your credit. Usually, they only check it when you first get a proposal and sign up with them in the very beginning. This means that if your credit score increases (or decreases), your insurance company does not automatically know about it.

So, to our client’s question of whether or not his increased credit score will lower his rates, the answer is: not automatically. What has to be done on our side as the agent is to contact the insurance carrier and ask them to do what’s commonly referred to as a “re-score.” This is when the insurance company can re-run the person’s credit (soft inquiry) to see any positive bearing on the rate.

This isn’t something that the insurance company will let the agency do every year, so it’s not worth asking unless there has been a significant change in your credit score, and only you, as the client, would know if that was the case.

Have More Questions?

If you have any questions about your Auto Insurance, or to review your policy limits, please contact us. For helpful tips on other popular topics, check out our articles on Cyber InsuranceWinter Home Protection, and Ransomware Developments. As always, we are here to help you, your employees, and your business with all your insurance needs — from commercial insurance to group benefits to personal insurance. Thank you for allowing Mason-McBride to serve you!

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