My car insurance co. did a credit check on all it's customers. Now, your rates depend on whats on your report. I have been with my company for about 4 years now, no accidents, no tickets, no claims, no problems. They sent me a letter telling I won't be getting the best rates because my credit check wasn't up to their standards. Are all auto insurance co. doing this, now, or is it just mine, and should I tell them to take a hike and find another? I am with American Family.
2006-10-14 04:18:50 · 10 answers · asked by joaniebalonie 2 in Cars & Transportation ➔ Insurance & Registration
It's legal in most states. Sadly.
Not all insurance companies do it, and some insurance companies have dropped the practice due to customer complaints.
If you're not satisfied with your insurance company and their practices, shop around for a better deal. Most folks can do better than the deal they're currently getting if they'd just shop around a bit. If you do decide to jump ship, be sure to let them know why you are doing it! When enough customers complain, the companies generally DO listen!
2006-10-14 04:27:30 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
The law of large numbers plays a role in all insurance underwriting parameters. The fact is, people with poor credit ratings are more likley to commit fraud than people who don't. Like it or not, the numbers and stats are there to prove it. Unfortunately a lot of honest people are caught up in this whirlwind with no recourse. Hear's another sad fact -- if you are completly debt free, own nothing on any credit cards, loans, home, etc., you have NO credit score. Even if you have a million dollars in the bank and earn a two hundred thousand a year you are slotted into the high risk/credit group. This person is very unlikley to set fire to his/her own vehicle because they can't sell it, it breaks down too often, etc. This scenario is a hot topic in the industry now and there could be some changes in the near future, i.e; manual underwriting in special cases. Until then, pay your bills on time and keep asking them to lower your rates.
2006-10-14 22:56:00 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The Insurance Industry came to the conclusion (About 50 years ago)that people with good credit, will keep their policy in force for the full term of the policy. And people who have poor credit are more likely to commit Insurance Fraud. So it's in the best interest of the Insurance Company to insure people with good credit ratings and good driving records. Your company uses a tiered rating system, and they may have 10 tiers they rate policies with. You might not qualify for your company's best rate but you probably don't have their worst rate either. If you are comfortable with your company's rate and you like your agent, keep them.
I am in the same situation as you are. Good Driving Record but not so good credit. All the major insurance companies will pull a credit report. They include, State Farm, Allstate, Nationwide, Progressive, Geico, Liberty Mutual, Safeco, Fireman's Fund and Farm Bureau, to name a few. If you do shop for a cheaper rate at renewal time. Limit your calls to 3 of the big name companies. So you limit the inquiries on your credit that in turn lower your credit score. And also call a local independent agent, who will have several companies to compare and some might not pull credit, but will give you discounts for safe driver and prior insurance. Hope I was able to help.
Good Luck!!!
2006-10-14 15:34:22 · answer #3 · answered by jjcane64 2 · 0⤊ 0⤋
Insurance is based on statistical analysis of historical facts. They analyze the claims and money that have been paid for a large group of people, and try to find common characteristics.
These are typically things like 'where you live', 'how many miles you drive', 'kind of car you drive', 'your age', etc.
Apparently, there is a correlation between the credit rating, and the claims/loss.
As long as the category is not based on your race, religion, etc., it's perfectly legal.
So even though you as an individual do not have claims, being a member of a category means that there is higher statistical probability that you will have a claim.
You should definitely shop around, you will probably even find a better rate.
But shop first, then decide!
2006-10-14 11:50:47 · answer #4 · answered by Carter S 2 · 1⤊ 0⤋
Pretty much all companies, in states where it's allowed, used credit when determining rates. Nothing you can do.The better business bureau can't do anything about that if the State Insurance Department has approved the ratings they use.
2006-10-14 11:48:09 · answer #5 · answered by Chris 5 · 2⤊ 0⤋
If you pay all at once then you would miss this scenario. However they cannot charge you a higher insurance premium for a bad credit rating, they can however charge you higher interest payments if paying monthly or quarterly premiums.
2006-10-14 12:39:07 · answer #6 · answered by MrsMac 4 · 1⤊ 0⤋
unfortunately a lot of insurances are doing credit checks now
2006-10-14 14:54:26 · answer #7 · answered by ssanborn27 1 · 0⤊ 0⤋
That's not right ! I would call the Better Business Bureau ion them and change Insurance company
2006-10-14 11:21:44 · answer #8 · answered by silverearth1 7 · 0⤊ 2⤋
why would yoy credit history affect the way you drive ditch em
2006-10-14 11:23:14 · answer #9 · answered by raudidave 3 · 0⤊ 1⤋
Yes, mine did that too.
2006-10-14 11:22:44 · answer #10 · answered by Little_Lilth 3 · 0⤊ 0⤋