@Anonymous wrote:
I have been pondering buying a car and doing "what if" scenarios by submitting quotes to car insurers with different models of cars, and other variables, just to see how the quote changes, partly to figure out how to budget, how long to wait, what model of car to consider. Anyway, after submitting one to Geico I got this back in my email a day or two later:
"The consumer reporting agency provided the following description of the credit factors that had the most influence on the price we quoted you:
Insufficient length of credit history (-) This reason is based on the age of the accounts on your credit bureau report (the age of the oldest account, the average age of accounts, or both). Research shows that consumers with longer credit histories have lower insurance loss risk than those with shorter credit histories. Also, consumers who frequently open new accounts have greater insurance loss risk than those who do not. Therefore, only apply for needed credit and wait before you apply for more. All other factors being equal, your score is likely to improve as your credit history ages."
That's true, I don't have much credit history. I have been in the US for only a few months, my oldest account is reporting 6 months to Equifax, and 5 months with Experian and TransUnion. I gather that GEICO did a SP from TU to come up with this? So they probably didn't even get back a score, if they are using FICO, becuase I don't have enough history yet at TU to get a score.
Anyone know how much of a difference this is making? Is it my lack of 6 months specifically that this is on about? Or am I going to get hit with this until I build a couple of years of credit history? I think Fico has an auto model but its not the only one out there that the lenders use, a lot of them use their own internal models based on whats in your report. Building and keeping a positive payment history will result in lower insurance rates. Just starting out you will most likely be paying higher premiums.
Overall, how much of a difference does credit history make to an auto insurance policy rate? It depends on the issuer of the policy, in some states its outlawed to use insurance scores based on credit.
Also, by the way, it looks like submitting "what if" quotes to Geico is a good way to get free TransUnion credit reports: the email advised I'm entitled to one. This approach to obtaining your credit report is not advocated by MyFico and advocating such would be a violation of the TOS. Didn't hit my file as a HP, just a SP (at least no sign of it yet and I will be a bit pissed off if it does show up as a HP). Insurance quotes typically result in SPs only, rare you get a HP for one.
@Anonymous wrote:
Thanks -- I found some information from their site:
https://www.geico.com/information/credit-use-faq/
I guess I'm still left with the question of how quickly is this going to change? Is it likely that the 6 month rule applies to this like it does other things, and I'm being heavily peanlized just for not having as core, in which case, within a couple of months it will change dramatically? Or is it more likely some long gradual AAoA / oldest account curve that is just going to improve gradually? Persoally I am not sure, I have not examined in detail auto insurance scoring models, but like the credit world I will assume that a longer history and a good AAoA will help your cause. Your biggest problem is you are new here so only time is going to heal the wounds of having to pay more now. From what I know of my own auto insurers they did not check my credit every time they renewed a policy, one never even inquired for 3 years into my credit history.
The difference between the two is a "wait" versus "don't wait" data point, because I'm not going to let the tail wave the dog and wait a year for a slightly better insurance rate. But I might wait a few weeks for one!
