Reader’s Question:
Does having a bad credit score in Omaha Nebraska make me a worse driver in terms of my car insurance premium rate?
Arnold
Omaha, NE
Insurance risk scores are linked to credit risk scores because both look at your credit information, but the two are not the same thing. While both insurance scores and credit scores look at the same five characteristics of a person’s credit report (past payment history, amount of credit owed, length of time credit established, new credit, types of credit established), the data are weighted differently. This difference in weighting can change 5 to 10 percent in each category. One big difference is that insurance risk scores focus on stability. Insurance scores are also more interested in your payment regularity than in the amount of your debts.
To identify consumers who are consistent and reliable, insurers use these insurance scores, as well as those who show a pattern of demonstrating common sense with money. People who have these patterns are less likely to file a claim on an insurance policy. Car Insurers believe that you should be able to improve your insurance score by placing importance on the factors that show long-term stability, so by demonstrating responsible use of credit and keeping your balances low. If you’ve been impacted by a negative credit history in the past, that could translate into lower insurance premiums. Be sure to talk to your Omaha, NE insurance agent to have further discussion on how your car insurance rate can be affected by your credit history.