Category Archives: Credit Scores

The Equifax data breach, your credit reports and your insurance policies

Our communications department has gotten calls about the insurance implications of the Equifax breach and what might happen to your rates if you freeze your credit. The answer, for most people, is not much. Insurers, where legal, look at your credit information when you first become a customer – when you first applied for coverage. They don’t re-evaluate unless you ask them to – something to keep in mind if you think your credit has improved. (This last is also subject to state laws – some states require a re-evaluation.) So, if you freeze your credit, there’d typically be no impact with the insurer you already have.

If you are shopping for insurance, the fact that you have applied for a policy, in most states, means that you have given permission that transcends your freeze order. So, the insurer would be able to use the information in its rating (as always, where legal.)
We also got a lot of other good information from Fair Isaac (inventor of the credit score). We will share that in a future post. . .. .



The use of credit scores in personal lines insurance in Arkansas

Every year the state of Arkansas surveys insurers to determine the impact of the use of credit scores in the rates that consumers pay. Here are results from last year’s policies.

During 2016 for all personal lines coverages:

  • 3,443,044 policies were written or renewed that involved the use of credit as one of the factors contributing to the final premium.
  • 1,877,353 policies (54.5%) resulted in the premium being decreased.
  • 681,038 policies (19.8%) resulted in the premium being increased.
  • In the remaining 884,653 polices (25.7%), credit was a neutral factor and did not contribute to or change the final premium.
  • For those policies in which credit played some role in determining the final premium, those receiving a decrease outnumbered those who received an increase by 2.76 to 1.
  • 80% of consumers either received a discount for credit or it had no effect on their premium.

More information at the link.