companies today is a credit score discount , which can be up to 45 % off your base premium ! Especially with insurance companies needing to increase premiums to cover the spike in losses they are seeing , one of the first things you should do when you review your insurance renewal this year is ensure your broker has used your credit consent to get you the best rate possible .
Now that we understand why this helps insurance companies determine risk exposure and premium , what happens if you agree to having your credit run ? Insurance companies will run your name , date of birth , and address history against a company that performs credit checks , and it brings back a discount for your policy . Brokers and underwriting companies can ’ t tell what your credit score is , only whether you are getting a discount and how big that discount is . On occasion , your credit score may be considered when a company is trying to make a decision about your policy so it uses your credit score for underwriting purposes . For example , if you got cancelled for nonpayment because you didn ’ t get your notification but you have no history of payment concerns and you are getting a large discount for your credit score , the underwriting company might allow you to reinstate the policy as your large credit discount would show that this nonpayment is not a usual occurrence for you .
Another thing that is worth understanding is how a credit check for insurance purposes affects you . It is a “ soft ” credit check , meaning it does not negatively affect your credit to have it checked for insurance purposes the way it would if you were applying for a loan . It shows the insurance company viewed it , and that ’ s it . In fact , most services these days use your credit — cell phone companies , landlords , car leasing companies , and even some employers !
Ultimately , credit scoring seems to be one of the main tools used by insurance companies , so it is important to understand how it works and why this could benefit you in the long run . If you ever have questions , feel free to ask your Waypoint insurance broker for more information and we will be happy to discuss it further ! +
BY : ALLISON GANDY BRANCH MANAGER AT WAYPOINT INSURANCE .
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