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Insurance Companies Check Credit Scores

2013/04/03 by editor

In case you haven’t figured it out by now, there are dozens of types of companies that pull your credit report to analyze what kind of credit history you have and how reliable of a borrower you are: landlords and property management companies, auto lenders, employers, and apparently even potential dating partners (though this is a new fad and one I hope will fade away just as quickly.) But did you know that insurance companies sometimes pull credit reports? True story. If your insurance company is one that does not, chances are you might not have had to deal with it. But on the advice of experts, we are all supposed to shop around for insurance quotes every now and again, so this is something that might come up for you in the future. I found this great article published by Jack Hungelmann of Fox Business that answers some questions and confusions about insurance companies and their motives behind pulling somebody’s credit:

“Why would an insurance company pull my credit report? I pay the premium upfront and in cash.
-Cary

Dear Cary,
To understand the credit report question, you have to understand that insurance companies are like giant baskets. Their policyholders pay money into the basket. Then, insurance companies pay claims from the money that’s in the basket to those who need it. The amount you must contribute to the basket depends on how much insurance you want and how you’re categorized as an insurance customer. The secret to lower rates is to be part of a group that has a lower probability of filing a claim.”

Click here to read the rest of Hungelmann’s answer, and get his advice about how to make things work in your favor depending on what kind of credit you’ve got.

Highly recommend insurance shopping if you haven’t done so recently. Think of Flo from the Progressive commercials. You really COULD be spending way more than you need to be on auto, home or renters insurance than you might with some other companies. But you’ll never know if you don’t compare. Just make sure to keep your credit nice and sparkly in case you run into a company that pulls your report.


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