What is an Insurance Credit Score?

The insurance industry uses your credit report to generate a unique score for their insurance underwriting and claim management. This is called an Insurance Score.

Many auto and mortgage insurance companies look at your credit report, in part, to determine if you are qualified for their lowest pricing plans.

They also look closely at recent financial stress that may hint at possible fraud.  Meaning if you’re maxed out on your credit, you might be tempted to make a false insurance claim.

It is also common that insurance companies will review a policy holder’s credit report to look for sudden financial stress which may spur them to investigate any damage, theft or lost item claim as possible fraud.

If you apply for life insurance over $150,000; your credit report will generally be checked as a matter of procedure.

Depending upon applicable state laws your credit report can even be used to deny you insurance.

Many people believe this practice is troubling.  Especially considering credit reports may have errors and identity theft is the number one complaint to the Federal Trade Commission.  In fact, a growing list of States prohibit the use of your credit report for determining insurance rates.

Smart Credit developed an insurance score that considers many factors insurance companies use to determine rates and possible fraud.  Our insurance score range is between 350 and 850 and this chart will show you how insurance companies may rate you:

Ultra-Preferred You should receive the best possible rates and terms for your insurance. 730-850
Preferred Insurance companies deem you as a low risk and a preferred customer. 690-729
Standard Your insurance rates and terms should be normal and average. 650-689
Mid-Market You should be underwritten with insurance, but your rates will be a little higher. 600-649
Non-Standard Your insurance rates will be high and your terms strict. 550-599
Sub-Prime You might not get insurance or your rates and terms will be very difficult for you. 350-549

SmartCredit.com includes this insurance score at no additional charge.  It’s a great way for you to track how insurance companies may judge your credit for your insurance rates or claims.

How to best prepare for an insurance application and get the best possible rates?

Be proactive!  Make sure your credit report is the best it should be before you apply for insurance.  Use SmartCredit.com to fix errors, get goodwill corrections and settle out debts.  It’s fast and easy with our Smart Action buttons.

David B. Coulter – founder and C.E.O. of Smart Credit