Most insurance companies, uses many factors to price your insurance, including your driving record, your claims history, the type of home or vehicle you own, and your credit-based insurance score (“CBIS”).
What is a CBIS and Why Does it Matter?
Your CBIS is not the same as your personal credit score, nor is it a measure of your credit worthiness. The CBIS is a number that measures your likelihood of having an insurance claim. Studies have shown that consumers with higher CBIS have fewer and less severe losses. For this reason the CBIS is useful as a rating factor, but it is only one of many that are used.
Because your personal credit history affects your CBIS, it is important to regularly review it and make sure that it is accurate. The Fair Credit Reporting Act (FCRA) allows you to order one report for free from each of the major credit reporting agencies each year. You may also purchase a “3-in-1 report” to review your scores from all three major credit bureaus—Equifax, Experian, and TransUnion.
Credit Rules Vary by State
Most states have rules that state how credit can be used in insurance. Contact your state’s Department of Insurance for the latest information on your state’s rules.
Credit Report Errors
If your credit record is incomplete or has an error, ask the credit reporting bureau to make the corrections. If they do they will notify you in writing.
If the credit reporting bureau makes any corrections you should contact your insurance company and have them update your file with the new information.