The 5 ways Insurance Companies View Your Credit

The 5 ways Insurance Companies View Your Credit.

When you purchase insurance there are many factors that go into the premiums you will pay. One of those factors is your Insurance Credit Score. Insurance companies will pull your credit from the credit bureaus and assign what they call an “insurance” score that may be different than your FICO or normal credit score. Some will pull one credit bureau over the next and some may choose all three major reports. Allstate, for example pulls Trans Union reports. The insurance score will help these companies in determining your insurance premium costs along with many other factors of coverage risk. While it is not known exactly how much your credit affects your premiums, it is a factor. .Insurance companies tell you they have been able to predict how likely you are to have a claim in the future by your credit score. They also feel that they can determine better whether you will be able to pay your premiums by your score. Many challenge the validity of the relationship between credit scores and insurance risk but insurance companies still pull your credit. If they determine your score is too low they may either increase your premium to cover the risk of insuring you or along with other factors deny you all together.

What do insurance companies look at regarding your credit? They will offer only generalities. How much this information exactly influences your premium amount is unknown and not divulged by the insurance industry.

1. Insurance Companies look at the number of months since your most delinquent payment, a payment made over 30 or more days late. If you have no lates in the last 5 years you’re good and your score isn’t affected in a negative way. If you have any payments that have been late over 30 days or more within the last five years, your score will be less favorable.

2. The number of revolving accounts where the current balance that you owe is greater thank the largest balance you once owed is also a consideration. Allstate uses a 75% debt limit. For instance, your highest balance (not credit limit) on your credit card (revolving account) was $5000.00. Now you owe $3550.00. For Allstate’s score purposes you now owe 71% of the high balance you once had. Since the threshold to a better premium has fallen under the 75% rule, you will be looked at favorably when calculating your best possible premium.

3. The average number of months your accounts are listed on your credit report is also considered, commonly referred as credit history. The longer the average age of all your accounts, the better your score will be. The insurance industry generally uses 14 years as an average.

4. The number of revolving accounts opened in the last two years influences your insurance credit score as well. Mortgages and car loans are not considered in this calculation. If you have no revolving credit issued to you in the last two years your score is more favorable.

5. The existence of public cases, tax liens, bankruptcies, collections and foreclosures will definitely have a negative effect on insurance premiums you will pay. In general these types of items are thought to predict greater possibility of future insurance losses and pay outs.


Equally as important as the 5 ways Insurance Companies can view your credit report to calculate your premiums, there are also several items of information they cannot use for or against you from your credit files.

They are:

1. The total number inquiries in your file. While this typically will lower your standard credit score for future debt the more inquiries you have in your file, this is not considered in your insurance risk factor.

2. The total amount of unused credit available will not be considered when creating an insurance score. That is where the 75% Allstate rule comes in. You should owe no more than 75% of your highest balance you had on given accounts.


3. Lack of credit history is not to be used against you in determining your insurance premiums. This is unlike banks who may deny you any credit if you have little or no credit to prove your worth.

4. Any vehicle or home purchases are not considered in your insurance premium calculation.


The types or credit and debit cards as well as who has issued them are prohibited from consideration when determining your insurance premiums. The amounts and the payment history, however, is allowed to be considered.

How do I manage my insurance score? The first step is to determine what your insurance company considers in their determination of your premiums you will pay. Contact your agent, your company or look at your insurance policy for an explanation. Get a copy of your credit report from the reporting agencies they use and you should be able to determine where your strengths and weaknesses lie. Those will be the areas you need to strengthen with careful and intended use of your credit.