Facts & Fallacies
- About Insurance Scores
- How Scoring Works
- About Credit Reports
Scores change gradually as you change the way you handle your credit obligations.
Fallacy: My insurance score determines whether I get insurance.
Fact: Insurers use a number of factors to make underwriting decisions, including your FICO® Credit-Based Insurance Score. Insurers look at information such as past claims history, your driving record (for auto insurance), property inspections (for property insurance), and the value of your property or auto. Based on their analysis of this information, as well as their specific underwriting guidelines (used to assess a consumer's eligibility for insurance), insurers may extend insurance to you even though your score may be low, or they may decline your request for insurance although your score may be high. Each insurer makes its decisions based on all information available and not based solely on an insurance score.
Fallacy: A poor insurance score will haunt me forever.
Fact: Just the opposite is true. A FICO® Insurance Score is a "snapshot" of your insurance risk at a particular point in time. It changes as new information is added to your credit bureau files. Scores also change gradually as you change the way you handle your credit obligations. For example, past credit problems impact your score less as time passes. Insurers typically request a current score when you submit a new application, so they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more favorable insurance rates.
Fallacy: Insurance scoring is unfair to minorities.
Fact: FICO® Insurance Scores do not consider ethnicity, religion, gender, marital status, nationality, age, income or address. Only pertinent and predictive credit-related information is considered.
Scoring has proven to be an accurate and consistent measure of insurance risk for all people who have some credit history. In other words, at a given score, non-minority and minority applicants present an equal level of insurance risk (which means they have an equal likelihood of future claims). For more complete information, you can learn more about what's in your score and what's not in your score.
Fallacy: Insurance scoring infringes on my privacy.
Fact: Insurance companies have used consumer credit information to assist in their underwriting decisions since the federal Fair Credit Reporting Act was enacted in 1970. An insurance score is simply a numeric summary of pertinent credit information. In fact, by using insurance scoring, some insurance companies don't need to ask for as much information on their application forms, and most no longer specifically review each consumer's credit report.
Fallacy: My insurance score will be hurt if I contact several insurance companies who each access my credit report.
Fact: Insurance company requests, or "inquiries," for your credit report are not considered by FICO® Insurance Scores and will not affect your score. Similarly, insurance company inquiries are also not considered by the FICO® Credit Scores used by lenders. For more detailed information, you can learn more under Credit Inquiries.