Published on August 22, 2017
Insurance is an ever evolving industry and the latest evolution is the introduction of a discount based on your credit score. While this discount was introduced a few years ago, it is now used by the majority of insurance markets. Insurers have introduced this discount to help them charge the appropriate amount for the risk they are assuming.
Insurance companies have determined that an individuals credit score is a strong indication of the likelihood of a customer will file a claim. Their studies have shown a direct correlation between a person’s credit score and the frequency/severity of insurance claims.
While insurance companies are rewarding those individuals with a good credit score, they are not penalizing anyone with an unfavourable credit score.
It's important to understand that it is your choice whether or not to allow the insurance company to access your credit score, it is not mandatory to provide this information.
As your insurance broker we collect your verbal or written consent before authorizing the insurance company to check your credit. Once the insurance company is given your consent, it will remain valid for as long as you're a customer or until you withdraw your consent.
Once the insurance company receives your consent they will request your credit score electronically using secure methods. Based on the rating they receive the appropriate discount is either applied or no discount is applied, depending on what the credit score is. It is important to note that we (One Insurance) do not have access to your credit score information.
Since your credit score can change year over year, the insurance company will continue to check your credit on the renewal of your insurance policy, providing that you haven’t withdrawn your consent.
When the insurance company does the credit score check it DOES NOT impact your credit rating, as they are only doing a “soft” check.
As mentioned a credit score inquiry will not affect your credit score although an inquiry will be recorded on your personal credit report.
Credit scores include a variety of credit characteristics, such as:
They DO NOT include information such as:
If the insurance company finds that you have an unfavourable or no credit score, you simply won’t be eligible for the discount. They do not surcharge the policy or penalize you for such results.
If you know you have an unfavourable credit score you can take steps to improve your credit score.
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