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Auto Insurance Fail Dropped my FICO score!!!!!

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ny7007
Established Member

Auto Insurance Fail Dropped my FICO score!!!!!

I've heard of a FICO score impacting what you pay for insurance, but I've never heard of an insurance policy impacting a FICO score.  Apparently, this must be true, at least in my case.  

 

My FICO score was 826.  On December 19th, ScoreWatch said my FICO score dropped to 801 (26 points!!)  but the activity that ScoreWatch cited for that date was that I paid my Bank of America CC down to $0 from about $460.  No big deal.  I had charged up to $5000 that month on a $15,000 credit limit, but I made a couple of payments within the month to get it back to zero.   I do that all the time without much problem on my FICO score.  So why would that effect my credit score?  It wouldn't.  

 

What else happened on the day of the ScoreWatch alert?  My daughter's vehicle registration and her driver's license were revoked for not having proof of insurance.  And yet she DID have insurance which I was paying for on my policy, but apparently she wasn't receiving.  For three months, my daughter had an issue between the DMV and Progressive Auto Insurance on my policy when she transferred her registration from Virginia to my state.  Somehow, I was paying for a policy but the policy number was incorrectly entered by either Progressive to DMV or from DMV to Progressive on an insurance soft check when DMV occasionally requests electronic proof of insurance from insurance companies.  This went back and forth for three months.  DMV would ask for proof that she had insurance.  Progressive would send proof----under the incorrect policy number.  DMV would send us a statement saying that her license and registration would be suspended if she didn't supply proof of insurance.  I went to the DMV, provided proof.  The guy there said that it's fixed.  I had Progressive send them the proof of insurance electronically, just to make sure.  Little did I know they would send it under the wrong policy number.  Then we received more notices from the DMV saying that she had no insurance.  More calls to Progressive and visits to DMV.  More proof of insurance submitted.  The DMV personnel said to ignore the notices, it was fixed.  We received a "final notice" from DMV that they were going to yank her registration and license on December 19th (the day in question of my FICO score drop).   I went to DMV, they said it was legitimate and she was going to lose her license and registration.  DMV blamed Progressive.  Progressive blamed DMV.  Finally, the Progressive Customer Service Rep had me speak with a nice person from the Progressive Insurance Verification Department who works on clearing up these kinds of issues.  Many calls back and forth berween the two of us.  I believe that she would have finally fixed it.  She said that it should finally be fixed but that my daughter couldn't drive for 5 days.  A visit to DMV said the same thing, that everything has to be done electronically at the State Capitol and it would take 5 business days (just like Progressive said).  But my daughter was planning a trip to do some jobs in several other states between Dec 20th and Jan 4th and she needed to drive there.  It was Christmas time and there were no airline tickets available, and even if there were, they would be exorbitant for multi-city destinations.  So she cancelled her Progressive Insurance and bought insurance with another company, which is what the DMV said usually happens when problems like this arise because they can process a NEW insurnace policy from a NEW company faster than renew an old policy from an existing company that is having problems with insurance verification.  She did this without my knowledge.  But it worked.  She got off my policy with her own insurance and I got a big drop in my FICO score as punishment from Progressive for her dropping her coverage.  So, insurance company information CAN effect your FICO score, not just the other way around. 

Message 1 of 8
7 REPLIES 7
CH-7-Mission-Accomplished
Valued Contributor

Re: Auto Insurance Fail Dropped my FICO score!!!!!

Insurance has nothing to do with the FICO algorithm.  If you paid off your only credit card showing a balnce -- all the way to zero -- that would tank your score.  FICO hates to see all revolvers at zero.  It wants one revolver reporting 1%.  Otherwise something else changed on your report.  Insurance is not even part of the data examined or program run.  FICO affects insurance but insurance doesn't affect FICO unless you get a collection or sued and a judgment entereted, etc.

Message 2 of 8
MarineVietVet
Moderator Emeritus

Re: Auto Insurance Fail Dropped my FICO score!!!!!


@ny7007 wrote:

I've heard of a FICO score impacting what you pay for insurance, but I've never heard of an insurance policy impacting a FICO score.  Apparently, this must be true, at least in my case.  

 

My FICO score was 826.  On December 19th, ScoreWatch said my FICO score dropped to 801 (26 points!!)  but the activity that ScoreWatch cited for that date was that I paid my Bank of America CC down to $0 from about $460.  No big deal.  I had charged up to $5000 that month on a $15,000 credit limit, but I made a couple of payments within the month to get it back to zero.   I do that all the time without much problem on my FICO score.  So why would that effect my credit score?  It wouldn't.  

 

What else happened on the day of the ScoreWatch alert?  My daughter's vehicle registration and her driver's license were revoked for not having proof of insurance.  And yet she DID have insurance which I was paying for on my policy, but apparently she wasn't receiving.  For three months, my daughter had an issue between the DMV and Progressive Auto Insurance on my policy when she transferred her registration from Virginia to my state.  Somehow, I was paying for a policy but the policy number was incorrectly entered by either Progressive to DMV or from DMV to Progressive on an insurance soft check when DMV occasionally requests electronic proof of insurance from insurance companies.  This went back and forth for three months.  DMV would ask for proof that she had insurance.  Progressive would send proof----under the incorrect policy number.  DMV would send us a statement saying that her license and registration would be suspended if she didn't supply proof of insurance.  I went to the DMV, provided proof.  The guy there said that it's fixed.  I had Progressive send them the proof of insurance electronically, just to make sure.  Little did I know they would send it under the wrong policy number.  Then we received more notices from the DMV saying that she had no insurance.  More calls to Progressive and visits to DMV.  More proof of insurance submitted.  The DMV personnel said to ignore the notices, it was fixed.  We received a "final notice" from DMV that they were going to yank her registration and license on December 19th (the day in question of my FICO score drop).   I went to DMV, they said it was legitimate and she was going to lose her license and registration.  DMV blamed Progressive.  Progressive blamed DMV.  Finally, the Progressive Customer Service Rep had me speak with a nice person from the Progressive Insurance Verification Department who works on clearing up these kinds of issues.  Many calls back and forth berween the two of us.  I believe that she would have finally fixed it.  She said that it should finally be fixed but that my daughter couldn't drive for 5 days.  A visit to DMV said the same thing, that everything has to be done electronically at the State Capitol and it would take 5 business days (just like Progressive said).  But my daughter was planning a trip to do some jobs in several other states between Dec 20th and Jan 4th and she needed to drive there.  It was Christmas time and there were no airline tickets available, and even if there were, they would be exorbitant for multi-city destinations.  So she cancelled her Progressive Insurance and bought insurance with another company, which is what the DMV said usually happens when problems like this arise because they can process a NEW insurnace policy from a NEW company faster than renew an old policy from an existing company that is having problems with insurance verification.  She did this without my knowledge.  But it worked.  She got off my policy with her own insurance and I got a big drop in my FICO score as punishment from Progressive for her dropping her coverage.  So, insurance company information CAN effect your FICO score, not just the other way around. 


I have to agree that insurance information is never part of the FICO scoring models so something else must might have changed in your reports.

 

Have you checked your full, free reports from annualcreditreport.com to see what, if anything, has changed?

 

While having all 0 balances on revolving accounts is not looked at kindly for scoring purposes 26 points seems excessive.

Message 3 of 8
ny7007
Established Member

Re: Auto Insurance Fail Dropped my FICO score!!!!!

Yes, I suppose that if it doesn't come up significantly within a month or two I should check all three reports to see whatever else happened on that particular date.  However, I find it interesting that nobody really knows exactly the algorithm for FICO scores.  

 

I read somewhere that there is something called "ChoicePoint" and that when you make an insurance claim (such as a homeowner's or auto insurance claim or loss), that they report to FICO and your score could drop.  Don't know if there's any truth to that.  Either way, the other poster said that's not the case and you agreed.  The other poster also said that bank card companies don't like you to pay your balance down to zero.  I do it all the time and my score has continued to go up slowly.  Then again, I'm a pretty heavy user of the B of A CC, so even if I pay it to zero, I'm usually charging something within a few days.   Thanks for the explanation.

Message 4 of 8
MarineVietVet
Moderator Emeritus

Re: Auto Insurance Fail Dropped my FICO score!!!!!


@ny7007 wrote:

Yes, I suppose that if it doesn't come up significantly within a month or two I should check all three reports to see whatever else happened on that particular date.  However, I find it interesting that nobody really knows exactly the algorithm for FICO scores.  

 

I read somewhere that there is something called "ChoicePoint" and that when you make an insurance claim (such as a homeowner's or auto insurance claim or loss), that they report to FICO and your score could drop.  Don't know if there's any truth to that.  Either way, the other poster said that's not the case and you agreed.  The other poster also said that bank card companies don't like you to pay your balance down to zero.  I do it all the time and my score has continued to go up slowly.  Then again, I'm a pretty heavy user of the B of A CC, so even if I pay it to zero, I'm usually charging something within a few days.   Thanks for the explanation.


To try and clarify a bit about zero balances what we mean is the reported balances each month. You can use a card as much as you want during a month with multiple charges and payments but it's the balance on the monthly statement that is used each month to calculate utilization. All zero balances is looked at as having no revolving activity and for whatever reason the scoring models frown upon that.

 

As for the formulas used to calculate different FICO scores remember that FICO is a private business and therefore has a good reason not to reveal them. Why help the competition? If everyone was aware of all the data they would not have a product to sell that is any different than others.

 

Other companies such as Coca-Cola keep trade secrets close to the vest.

 

 

Message 5 of 8
cashnocredit
Valued Contributor

Re: Auto Insurance Fail Dropped my FICO score!!!!!

While FICO scoring algorithms are proprietary (otherwise they couldn't sell scores) they are derived solely from information in your consumer credit report. By law they can't consider anything beyond the data disclosed to you on a direct purchase of a credit report or the free annual report. Nor can they include items not disclosed to other creditors such as soft inquiries. There are other variables FICO states they don't use such as age, employer, etc.

 

There are other consumer data report providers and they can include insurance info but this data is not available for FICO credit scores since it isn't a part of your credit reports.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 6 of 8
takeshi74
Senior Contributor

Re: Auto Insurance Fail Dropped my FICO score!!!!!


@ny7007 wrote:

I read somewhere that there is something called "ChoicePoint" and that when you make an insurance claim (such as a homeowner's or auto insurance claim or loss), that they report to FICO and your score could drop.


You're assuming causality and it's just coincidental.  As stated above, scores are generated based on data in your reports.  In order for insurance to have affected your score it would have to be indicated on your report.

 

Creditors do not report to FICO.  Creditors report to CRA's.  FICO scores are based on reports from the 3 major CRA's -- i.e. you have a FICO for Experian, you have a FICO for Equifax and you have a FICO for TU for any given FICO model.

 

If you want to determine the cause you need to carefully review a report prior to the score change and a report after the score change to determine the cause, keeping in mind that it's not just additions and deletions that affect your score but aging, rebucketing, etc.

 


@ny7007 wrote:

What else happened on the day of the ScoreWatch alert?


Also the cause would not have happened on the day of the alert.  It takes the CRA's several business days to update after a change is reported (aside from pulls anyway).

Message 7 of 8
ny7007
Established Member

Re: Auto Insurance Fail Dropped my FICO score!!!!!

OK.  The consensus is that I should pull my credit reports to see what else is going on and that the insurance glitch is coincidental.  Thank you to everyone who responded.

Message 8 of 8
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