October 19, 2021

Insurance Score vs Credit Score



Confused about the difference between an insurance score and a credit score? Let’s help you learn about the two and how it relates to your insurance rate and premium price.


Is an insurance score the same as a credit score??                                                                                                                                                                                                                                                  * NO. A credit score shows lenders how likely you repay your debt. An insurance score is used to show insurance proceeds how likely you are to have a claim. Keep in mind your credit report does affect your insurance score. Often heard as a credit-based insurance score.

*A credit-based insurance score is another phrase for an insurance score. Now, it is more common practice for most states to have a credit-based insurance score also factored in.



Why do insurance companies use credit scores?


            *Insurers use credit score rating as a factor in your credit-based insurance score because it helps predict the total number of claims a person is likely to claim. Your insurance score helps provide a proper premium amount based on the overall risk.


How are insurance scores determined?

Here is how it’s calculated.

  • Payment History
  • Outstanding Debt
  • Credit history length
  • Pursuit of new credit
  • Credit mix


Will insurance quotes affect my credit score?

            *No, quotes will not affect your credit score. Insurers do what is known as a  “soft pull”, while you will see these requests on your credit report.


Where can I find my insurance score?

  • You should be able to find your insurance credit score listed on your credit report.

The Fair and Accurate Credit Transaction Act of 2003 lets consumers obtain a free credit report annually from the three big guys: Equifax, Experian and TransUnion. Visit www.annualcreditreport.com once every 12 months to check all 3 reports.


What is considered a good insurance score?

  • The insurance score scale ranges between 200 and 997. It works like the credit score range in the same way that the higher your score, the better your score. A good insurance score is in the range of 776 and higher.



How can I improve my insurance score?


  • You can improve your insurance score the same way you can improve your credit score. Paying your bills on time, limiting the amount of debt you take on and don’t have too many credit cards.