Hello. I am Ron Philleo with Philleo Agency Insurance. A lot of insurance companies are using credit scoring to determine your rates and your eligibility in order to be able to get insurance. Today I am going to talk to you a little bit about how that you can benefit you or how it may hurt you.
Why do they use credit scoring? Well credit scoring is just another underwriting tool. It is like your driving record or your claim history. Insurance companies have found there is a strong correlation between people with good credit scores and people who file less claims.
They way I like to explain it to a lot of my customers is they are very familiar with good student discounts. Students that get a B average or better usually get a little bit lower rate on their auto insurance. Well this is kind of like good student discounts for adults.
People who tend to be responsible in one area of their life with their credit scoring, making sure their bills are paid on time and take that part of their life seriously tend to file less claims, and they tend to keep a closer watch on things, which help minimize the losses for the insurance companies. That is why they give the credit scoring discount.
What can you do and how can it benefit you? Well, insurance companies may rely heavily on credit scoring. If you have a good credit score, you are going to want to use one of those companies because they are going to reward you and they are going to give you lower rates for your high credit score.
If you have an average credit score, well you will want to shop around because some companies, they way they do their credit scoring model, it can vary widely from one company to the next, so make sure you shop around. We recommend using an independent agent. They will have a lot of companies they can shop around for you.
And if you have a poor credit score or possibly a bankruptcy on your record, you are going to want to make sure you are talking with independent agents because they are going to have more options for you than what is known as a direct writer that can only write for one carrier.
If you do have a poor credit score, you might want to try to use a carrier that does not take your credit into account. If you have a bankruptcy, almost every company looks at that. But depending on your circumstances, that may be OK. Make sure you tell the circumstances of your bankruptcy to your agent so he can work with the underwriters to try and get you a policy that is going to work for you.
But credit scoring can be good, can be bad, can be indifferent. It depends on your situation. Work with an independent agent. Let them know what is going on in your life, the circumstances of the credit, and they will be able to help you. But we always recommend, again, working with your agent closely on these issues with credit scoring. They are happy to answer any questions you have.
And of course, we are happy to answer any of your questions here at the Philleo Agency. If you would like to contact us, feel free. You can go to Philleo.com or contact us by phone or fax.