Last night I heard a talk show host last read a reporter's story about how car insurance agencies are using your credit report and score for car insurance approvals. People with bk's and major derog will be denied car insurance. The scary part is the article stated that more than half of insurance companies now are doing credit checks and more companies are going to do this in the future. I hope people will comment here whether or not credit checks are coming to every car insurance agency. If so, what does it mean for those us rebuilding credit? Are we screwed until the derog falls off our credit reports? Maybe longer?
AS I HAVE SAID BEFORE...I have good credit, I have one ticket 7 mph+, no parking tickets, no accidents...IF MY CREDIT GOES IN THE CRAPPER...I'M GOING TO BE A HIGHER RISK??? MY POOR SCORE IS GOING TO MAKE ME HAVE 7 ACCIDENTS, 5 SPEEDING TICKETS, AND 17 PARKING TICKETS??? NO WAY!!!!!!!!!!!!
I am currently using Progressive Auto Insurance. I live in New York. According to Progressive, "When we quote, issue, service or renew an insurance policy, we require certain information about the people or property being insured. Some of this information is obtained from you, and confirmed or supplemented through information obtained from various consumer reporting agencies, which provide motor vehicle reports, claim reports, and credit reports. This information is used to underwrite and service your insurance policy and its renewals. Any increased charge or other adverse action may be attributable to use of this information. No consumer reporting agency made any decision to take an adverse action with respect to your insurance and will be unable to confirm whether or provide the specific reasons why such action was taken." I spoke with a rep last month because my rates went up. I spoke to a rep on my 25 birthday and she assured me that my premium would go down upon renewal. Apparently, there was a rate hike for all of NYS and it may or may not have hit you yet. At any rate, we talked about the hard inquiry on my reports every 6 months. I explained to the rep that the hard inquiry was not for a permissable purpose because I pay my premium in full every 6 months and therefore I do not have an "account" with them. I also told her that I understand their policy and that if an inquiry must be done on my report at least code it as soft. She agreed with me, but told me that the computer makes the decision to pull a credit report, not a human. She also told me that there is nothing that the humans can do to stop the inquiry from happening. Needless to say, I don't see what my credit report has to do with my driving record. My driving record is perfect, my credit report is not. Does having bad credit make me a bad driver? I don't think so, but at least I know where the premiums are cheaper! Good Luck!
I was able to squeak by and get a good deal from State Farms when my credit was shot. They didnt do a credit check in Oct of 2000. I think even they pull credit now. I know that Geico, Allstate, and Progressive do for sure. I think you can get your small time local insurance agent to find you a insurance firm which will not pull a credit report. Good luck! And, btw: I think it sucks but what can we do about it now in the short term.
George, I agree with you. But what I think these bull crappers are saying is bad credit is a reflection of a moral weakness and character flaw. So that negative translates to the insurance premium. It's not fair or right, but that is their thinking, I believe. Maybe I am wrong but I don't see how the car companies would rationalize it any other way and get away with denying insurance or charging higher rates. My fico is a lot lower than yours as I am still rebuilding. I am scared.
I work for an insurance company in their customer service center. Yes, we order your credit score. **THIS DOES SHOW AS A HARD INQUIRY ON YOUR REPORT SO BE SURE YOU ASK IF "CONSUMER REPORTS" ARE ORDERED IF YOU'RE SHOPPING FOR INSURANCE, THEY WILL TRY TO MAKE IT SOUND AS IF IT'S NOT REALLY A CREDIT REPORT, BUT IT IS** We won't deny you insurance based on a bad score, but you will pay a higher rate. This has nothing to do with your ability to pay premiums, as some people believe. We are not extending credit. Insurance premiums are paid in advance. If you don't pay, we don't insure you, end of story. However, your financial condition is an indicator that you may have a high frequency of claims. After all, if you don't pay your bills, its probably because you don't have any money (wow, news flash. LOL) and that means you'll be turning in a claim for every little thing instead of self-insuring. So we charge a higher premium to help offset the cost of claims.
Ok, Point taken, but if consumers have low credit scores, because they don't have any money, how can they afford to pay the higher premiums the insurance companies impose on those *bad* people? I understand about the claims thing, but just because I don't have stellar credit doesn't make me a claims hoarder. In fact, I have a perfect driving record, and NEVER a claim. So, what you are saying is that for people with a claims history and driving record like mine, I am being punished by the other 10 million slobs that make the insurance world a bad place, just because of my credit history? That doesn't make any sense to me.
Sorry DoodyHead er, Mr. DoodyHead, I have to disagree with you. I may have screwy credit, but have only turned in two claims ever in my life and I feel the State of Ohio should pay me cause it was their deer they failed to maintain control of! I think you find scammers in all walks of life and with poor to excellent credit. But a driving report and criminal check would tell you all you need to know, not a credit report. Annie
I think the problem has to do with many states charging extremely high insurance premiums and for the most part people have to finance their insurance payments thru a outside agency. These co have coupled with the insurance firms and started this unfair practice across the board. Insurance for NYC, Northern NJ and Philadelphia is roughly $2500-$3500 annually with good credit and a newer car. In that case credit does count for insurance premiums because you are financing the payments. Dont get me wrong, I dont agree...just trying to make a point. That is how I think this whole thing started and the system is taking advantage of it. But those are just my thoughts
roni, I see what you are saying, but my car is paid for. I paid cash up front, so there are no payments. I only have liability insurance on the car because it is paid for and it is a 1989. So maybe someone can help me here. How is credit related to my situation? What I think is happening here is that the insurance companies are exploiting the poor credit customers. They grant those people insurance and make it seem like the insurance company is doing them a HUGE favor by insuring them at all. The average Joe pays through the nose when he really doesn't have to and when a giant deer darts out infront of Joe's car and totalls it, it is Joes fault because he has poor credit. HOW IS THAT FAIR??? I know, I know, life is not fair.
If our premium is too high, then you'll take your business elsewhere, which is what we want you to do. Sounds heartless, doesn't it?? I am being punished by the other 10 million slobs that make the insurance world a bad place, just because of my credit history?[/QUOTE] Exactly, it stinks, and believe me, most insurance co's are going to this, all our major competitors are already doing this. (farmer's, allstate, state farm, progressive... not sure what Geico's doing... but watch out, their rates are going to go WAY up due to their lack of profitability recently) We're not just doing this for auto insurance, but home insurance as well. With us, you can start out with a low score, we will check it again upon renewal, and take only an IMPROVEMENT into consideration & we'll ignore it if the score gets worse. Does that make sense?
Erica, I was referring to premium payments on the insurance not the car. With higher rates you are forced to finance the cost of insurance premiums so it is all a vicious cycle. NY liability is a beast as well Erica, but I was able to get insurance in NY without credit hurting me. Online applications w/ my credit score of 605 was from $4500 to $8000 annual for NYC....no thanks. I paid $3200 without consideration to credit. (full coverage, new driver) The insurance broker did it through the NY state insurance ......EAGle insurance. Shop around!
Here's another question for those kind enough to respond to my original question. How is it that subprime credit cards are becoming a huge market competitive with prime cards (with better Apr's, credit lines), and yet now insurance companies for car AND home are trying to price the average Joe out of the market and into subprime hell? An insurance industry trying to establish a subprime category and customer base by separating the prime from the subprime? Sorry for my ignorance. If that above statement is obvious to everyone but me I apologize. I am not a business person.
I think I'll respong to several at once, Now keep in mind I'm not an expert on insurance in all states, but I do sell insurance and am licensed in my home state & have non-resident licenses in most others. Annie regarding the deer, hitting an animal is usually considered a comprehensive claim, not a collision, so your rate should not have gone up because of that. If your co. surcharged you because of that, I'd find another ins co!! Felice- we will adjust your rate down if your score improves, yes. we will NEVER adjust it down if it worsens. Roni- you are right about NYC, & I don't do NJ but I have heard it is very bad. All- yeah, it sucks, I have bad credit too, and it affects my rates too. And I hate seeing that insurance bill in the mail every month too.
roni, Sorry for the misunderstanding. I do know what you are talking about now, and I agree with you. My premium with progressive for just liability is now $431 for 6 months. I have looked into AMEX insurance and will call them when I return in 2 weeks. Thanks!
Roni, Wanted to mention one thing about rates in NY. Part of the reason your rates are so high is the screwy insurance laws. Some states like NY won't allow Ins co's to surcharge - or "penalize" you for having a violation or accident that's your fault till you've had a few. Which in turn, doesn't allow the ins co to get the proper rate for our exposure -charge you enough. So in addition to making it difficult to GET insurance if you've had an accident or violation, it is also very expensive for the GOOD drivers too. Not that youre a bad person for having a ticket, it just means you're a higher risk. Write your insurance commissioner, get involved when they're trying to pass insurance laws, make sure you know what's going on in the industry, or move someplace like Wisconsin, where you're probably only going to pay $300 a year. LOL. I know, everyone hates insurance companies, we're big and evil & we steal your money, but when you're standing there outside the burned remains of your house and we write you a check for $200,000, you will be glad you had it.
