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Your credit score reflects how credit worthy you are. Everything from loan payments to requests for credit and utility payments can affect this score. As you age, this score improves as length of credit history also dramatically affects your score. You need a decent credit score to buy a house, get a new car or open a line of credit. In short, it’s incredibly important to groom your credit.

But what about your insurance credit score, or rather just your “insurance score”? Most people haven’t even heard of it and yet it matters a great deal. When an insurer looks at your credit and past insurance history, they make a decision about how much to charge you. All of this comes back to that insurance credit score and understanding your insurance score can help you save thousands in the future.

Understanding Your Insurance Credit Score – And Why It Matters

understanding insurance credit score

How does my insurance score work?

Much like your credit score is determined by your payment history and all the factors we discussed above, your insurance score is determined by external factors, mainly:

  • Information gathered from your credit report
  • Your past insurance claims

If in the past you’ve had yearly claims on your car or health insurance, then you might be a risky investment for an insurer. A person who is routinely in car accidents is probably not a great driver, and a person who is sick all the time might not suddenly become healthy. Coupled with your credit history, the insurer gets a complete picture of the risk they’re taking on when insuring you, which will determine if they accept you and how much you’re going to pay in both premiums and deductibles. In short, the less risky you are, the less money you’ll spend.

Is my insurance score the same as my credit score?

Even though they use similar information, they are not the same. Your credit score determines your likelihood to be able to pay back a loan or make monthly payments on a credit card, whereas your insurance score determines how likely it is you’ll be liability, make a claim, or overall cost the insurer money.

The negative aspects of your actual credit score can be factored into your insurance score, though, so they’re not entirely separate. In addition, just as Experian, TransUnion, and Equifax report on your credit, there are companies that report on your insurance claims. There are more, but a few examples are:

  • Automated Property Loss Underwriting System (A-PLUS)
  • Comprehensive Loss Underwriting Exchange (CLUE)

These companies get reports on property claims you’ve made and insurers can pull your information from them to affect their decision on your premiums. Again, your insurance score can and will affect your costs when buying homeowners, health, life and auto insurances, so knowing your number.

How do I find my insurance score?

Unfortunately, there are no laws that govern your ability to access this score – it’s not like your credit. There are companies out there that can compile information and give you a score, sometimes for a fee. Another option is to sign up for a company like Credit Karma which offers free basic credit monitoring, and they will provide an insurance score which can be a rough guide for you. Ultimately, your insurance score will be used differently depending on the type of insurance you’re looking to buy. Auto insurers, for example, are more lenient in some cases than a medical insurer will be.

How do I improve my insurance score?

Now that you know what the insurance score is, here are some ways to improve it:

  • Keep all of your accounts up-to-date; late payments and collections will severely hurt your credit score and negatively affect your insurance score as well.
  • Drive carefully and get a driving monitoring app that tells you when you’re doing things like hard braking or speeding. Chances are your car insurance company has such an app and it will even probably save you money by driving safely.
  • Keep your credit usage low. Using too much of your available credit makes you appear to be a risky prospect.
  • Keep your applications for lines of credit as minimal as possible.

These factors primarily will affect auto insurance, but for medical and life insurance, there are some ways to improve your score as well:

  • Go to your doctor yearly, and keep up healthy practices. Check with your insurer or prospective insurer to see if they have incentives for going to the gym, losing weight or quitting smoking. While these things won’t directly affect your score, being healthy and claiming less on your health insurance will improve your score.

Finally, get ahead of problems with your home, as claims on your homeowner’s insurance will affect your insurance score as well. And unfortunately, one of the biggest impacts to both your credit and insurance score is time, which obviously isn’t something you can change. The longer you’ve had an established, good credit report, the more positively it will affect your insurance and credit.

Use your insurance score to your advantage

As with your credit score, the key to improving and utilizing your insurance score lies in being responsible. Drive carefully, stay healthy and pay your debts down quickly. Don’t over-utilize your available credit, don’t allow things to go to collections and do your best to avoid needing to file claims with your insurance companies.

Finally, check with your health, life, auto and homeowner’s insurance companies to see if they offer incentives for safe driving, healthy living or preemptive repairs. While these tactics won’t improve your insurance score directly, they will all help lower your premiums and build habits that actually will lead to outcomes that improve your insurance score.

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