Insurance companies discovered several years ago that people who are responsible about their credit are usually responsible about other things – including the serious responsibility of 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 important 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.

By Brian Wilbur

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Insurance quotes and insurance company underwriting have recently added a new factor for evaluating new customers. Now, insurers will check your credit scores. They have determined through statistical testing that people with good credit scores are better risks, and that undesirable credit scores are not good potential customers. Insurance companies and agents that see a person with a high credit score will consider you a low-risk client.

There are many consumers who worry that requesting new insurance quotes could have a negative affect on their credit scores. When agents or insurers pull up your credit report, it creates an “inquiry” on your credit history. Inquiries can sometimes lower your credit score by a few points.

So, does shopping for insurance quotes lower your credit score?

The answer is “NO.”

There are two types of credit inquiries:

“Hard Pulls” – this refers to credit inquiries for acquiring credit as from a lender, credit card company or a merchant credit card.

“Soft Pulls” – this refers to inquiries made that review your credit score. This is the kind of “pull” that an agent or insurance company will do during the quote process. Soft pulls are not noted on your credit report except listing the name of the entity that made the request. But the Soft Pull does not lower your credit score.

So, you may be confident that shopping for insurance quotes will not lower your credit score. And it is very important to know that a good or high credit score can lower your insurance rates when you shop for insurance quotes.

Hot Tip: The trade group Independent Insurance Agents and Brokers Association (IIABA) finds that 85% of new insurance buyers will use the Internet for rate quotes and research before making a purchase. Start shopping online for insurance and allow excellent local insurance agents to contact you with the most competitive quotes for your insurance needs.

You could save hundreds of dollars per year through the insurance quote process. Many times, the new agent you choose will handle cancellation of your old policies and take care of all the paperwork. Shopping on the Internet for insurance quotes is easy, simple and FREE!! It does not cost you one cent to get an insurance quote. In a matter of minutes after you submit your request, agents will begin contacting you to complete your quotes. You could get better coverage for less money…it happens all the time.

By Russell Longcore

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