Home and Auto Insurance
Re-aging blemished open accounts
A lot of people don’t know that your insurance company uses credit-based scores to determine how much you pay for insurance.
What kind of information goes in to my credit-based insurance scores?
There are several different companies that create credit-based insurance score reports for insurers to use. FICO looks at five general areas it believes will best determine how you manage risk. This is the breakdown of how it calculates your credit-based insurance score:
- Payment History (40%) — How well you have made payments on your outstanding debt in the past
- Outstanding Debt (30%) — How much debt you currently have
- Credit History Length (15%) — How long you have had a line of credit
- Pursuit of New Credit (10%) — If you have applied for new lines of credit recently
- Credit Mix (5%) — The types of credit you have (credit card, mortgage, auto loans, etc.)
TIP: If you are making good progress on raising your credit score, here is a tip to save you some money... Call your insurance company or agent and explain that your credit score has improved and inquire what savings they can offer on your current policy.