topic Re: Improved FICO Scores = Lower Insurance Rates! in General Credit Topics

Improved FICO Scores = Lower Insurance Rates!

Anonymous — Wed, 24 Aug 2016 23:26:04 GMT

After having raised my credit score from the low 500s to 700 within the past 9 months, I contacted my auto-insurance provider to see if it would affect my rate. Whenever information is corrected on your CR, you legally have 6mos to have new CRs sent to anyone who may have pulled it (12mos in some states & two years for employers). I informed Progressive of these changes and they said that while they didn't factor actual credit scores, the negative items that had been deleted would significantly affect my rate. They only perform soft pulls once every three years where I live, so they otherwise wouldn't have caught the changes for another 2 years.

The process will take then 24-48 hours to get back to me with the new rate, but it sounds as if I'm in for substantial changes. The Analyst was incredibly helpful, though it seemed as if this was maybe the first time they'd ever received a call like mine. Just a reminder to everyone out there who has been hard at work building up their scores, it affects nearly everything -- even your insurance rates. Be sure to take advantage! I'll update when I receive word on my savings!

Re: Improved FICO Scores = Lower Insurance Rates!

daybreakgonesXe — Wed, 24 Aug 2016 23:30:27 GMT

@Anonymous wrote:
After having raised my credit score from the low 500s to 700 within the past 9 months, I contacted my auto-insurance provider to see if it would affect my rate. Whenever information is corrected on your CR, you legally have 6mos to have new CRs sent to anyone who may have pulled it (12mos in some states & two years for employers). I informed Progressive of these changes and they said that while they didn't factor actual credit scores, the negative items that had been deleted would significantly affect my rate. They only perform soft pulls once every three years where I live, so they otherwise wouldn't have caught the changes for another 2 years.

The process will take then 24-48 hours to get back to me with the new rate, but it sounds as if I'm in for substantial changes. The Analyst was incredibly helpful, though it seemed as if this was maybe the first time they'd ever received a call like mine. Just a reminder to everyone out there who has been hard at work building up their scores, it affects nearly everything -- even your insurance rates. Be sure to take advantage! I'll update when I receive word on my savings!

Very nice! Just as a side note, not all states use FICO scores for certain insurance rates, such those that require you to have auto insurance. My state in NJ is an example.

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 00:05:21 GMT

@daybreakgonesXe wrote:
@Anonymous wrote:
After having raised my credit score from the low 500s to 700 within the past 9 months, I contacted my auto-insurance provider to see if it would affect my rate. Whenever information is corrected on your CR, you legally have 6mos to have new CRs sent to anyone who may have pulled it (12mos in some states & two years for employers). I informed Progressive of these changes and they said that while they didn't factor actual credit scores, the negative items that had been deleted would significantly affect my rate. They only perform soft pulls once every three years where I live, so they otherwise wouldn't have caught the changes for another 2 years.

The process will take then 24-48 hours to get back to me with the new rate, but it sounds as if I'm in for substantial changes. The Analyst was incredibly helpful, though it seemed as if this was maybe the first time they'd ever received a call like mine. Just a reminder to everyone out there who has been hard at work building up their scores, it affects nearly everything -- even your insurance rates. Be sure to take advantage! I'll update when I receive word on my savings!
Very nice! Just as a side note, not all states use FICO scores for certain insurance rates, such those that require you to have auto insurance. My state in NJ is an example.

Only CA, MA and HI ban the use of credit factors in auto insurance rates So is the NJ restriction on minimally-required insurance or

something?

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 00:19:41 GMT

I can totally relate to this. Last year I was turned down for insurance because my score was less than 650.

Re: Improved FICO Scores = Lower Insurance Rates!

Thomas_Thumb — Thu, 25 Aug 2016 02:02:46 GMT

@Anonymous wrote:
After having raised my credit score from the low 500s to 700 within the past 9 months, I contacted my auto-insurance provider to see if it would affect my rate. Whenever information is corrected on your CR, you legally have 6mos to have new CRs sent to anyone who may have pulled it (12mos in some states & two years for employers). I informed Progressive of these changes and they said that while they didn't factor actual credit scores, the negative items that had been deleted would significantly affect my rate. They only perform soft pulls once every three years where I live, so they otherwise wouldn't have caught the changes for another 2 years.

The process will take then 24-48 hours to get back to me with the new rate, but it sounds as if I'm in for substantial changes. The Analyst was incredibly helpful, though it seemed as if this was maybe the first time they'd ever received a call like mine. Just a reminder to everyone out there who has been hard at work building up their scores, it affects nearly everything -- even your insurance rates. Be sure to take advantage! I'll update when I receive word on my savings!

Just to clarify - Your standard Fico scores are not the scores looked at by insurance companies when setting insurance premiums.

The scores typically considered as an element in setting insurance premiums are insurance based credit scores (CBIS). The primary provider of this score is LexisNexis. Transunion and Fico also offer CBIS but, LN is dominant. More often than not CBIS scores will go up when Fico 08 scores increase. Both standard Fico 08 and CBIS look at many of the major scoring factors in the same way.

However, CBIS looks at many other factors that are not considered in Fico 08. Thus, it is possible for Fico 08 to increase while LN CBIS goes down. Some other threads do into this in some detail

Re: Improved FICO Scores = Lower Insurance Rates!

greent — Thu, 25 Aug 2016 03:50:59 GMT

My score recently went up to 702. I recently got a new insurance company and the rate was pretty low. Lower then what I had. I was happy.

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 14:11:12 GMT

I didn't know that actually. I can understand the argument to FICO score relevance on both sides though. Thanks for sharing!

Very nice! Just as a side note, not all states use FICO scores for certain insurance rates, such those that require you to have auto insurance. My state in NJ is an example.

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 14:12:14 GMT

I've experienced that too. State Farm came back so outrageously high it was obvious they didn't want me as a customer. Only Progressive came back with a reasonable rate.

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 14:16:16 GMT

Thanks for clarifying this. The Analyst in fact told me that credit scores are never considered, just the substantive material of the credit reports. In my case, four collections accounts and two 30-day lates were removed, so she made a point to tell me that it would affect the rate without question. She didn't mention LN, but I've since researched and found that there are no less than dozens of credit bureaus in the US, most which specialize in a very specific category: i.e., auto, medical, insurance, etc.

Just to clarify - Your standard Fico scores are not the scores looked at by insurance companies when setting insurance premiums.

However, CBIS looks at many other factors that are not considered in Fico 08. Thus, it is possible for Fico 08 to increase while LN CBIS goes down. Some other threads do into this in some detail

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 14:20:23 GMT

@Btw, @Thomas_Thumb, congrats on the 850s! Any advice? I've read some perspectives that say the only way to a perfect score (besides what is obvious) is to have all four different types of credit. i.e. Installment, Revolving, Mortgage & Consumer Finance (which I assume is a personal loan or a personal line of credit?) Do you have any perspective on this?

@Thomas_Thumb wrote:

Just to clarify - Your standard Fico scores are not the scores looked at by insurance companies when setting insurance premiums.

The scores typically considered as an element in setting insurance premiums are insurance based credit scores (CBIS). The primary provider of this score is LexisNexis. Transunion and Fico also offer CBIS but, LN is dominant. More often than not CBIS scores will go up when Fico 08 scores increase. Both standard Fico 08 and CBIS look at many of the major scoring factors in the same way.
However, CBIS looks at many other factors that are not considered in Fico 08. Thus, it is possible for Fico 08 to increase while LN CBIS goes down. Some other threads do into this in some detail

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 14:24:55 GMT

UPDATE: I received my revised premium this morning and it went down over $350 annually or more than 20%!

Like others pointed out, my credit score was not actually considered in the revisement, but the substantive material of my credit report was considered. In my case, that involved four collections and two 30-day lates being removed. I've since contacted regarding my renters insurance as well.

In my state, they only do soft pulls once every three years so if I hadn't contacted them I would've been stuck paying the higher rate for another two years -- so my savings really is closer to $700!

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Thu, 25 Aug 2016 15:11:58 GMT

mkpush great work! Admire your tenacity and diligence in pursuing better insurance rates. Since we could start a debate on the relevance of credit to insurance risk I won't. Your obtaining a drop in your rates of over 20% is notable and may serve as a guide to others. As always, it pays to shop insurance rates from time to time since companies have different rate structures and some do not benefit long term customers (I know this doesn't seem logical but it is).

Re: Improved FICO Scores = Lower Insurance Rates!

iv — Sat, 27 Aug 2016 20:20:16 GMT

@daybreakgonesXe wrote:
Very nice! Just as a side note, not all states use FICO scores for certain insurance rates, such those that require you to have auto insurance. My state in NJ is an example.

Just to clarify, NJ does allow the use of credit scoring for insurance in general, but not for certain required-minimum policies.

From http://www.state.nj.us/dobi/division_consumers/pdf/insurescore.pdf

Auto insurance companies that use insurance scoring must notify policyholders of the practice, the factors that affect the scoring, and whether an “adverse event” is being considered.

Other protections prevent auto insurance companies from using insurance scoring as the only factor in determining rates. DOBI also requires auto insurance companies to submit their scoring model to the Department and to fully disclose the factors used in establishing the model as well as its statistical justification. New Jersey auto insurance scoring models cannot consider race, ethnicity, sex, age, religion, income, address, unpaid medical bills, and the number of inquiries made within 30 days for home and auto loans.

DOBI protections also: 1) prohibit auto insurance companies from using insurance scoring for consumers covered by the Dollar-a-Day or Basic Policy programs; 2) prevent auto insurance companies from putting a consumer without a credit history in a below-standard tier without actuarial justification; and 3) requires auto insurance companies to protect policyholders who have been with the company for seven years and had no claims or violations.

DOBI’s guidelines also require auto insurance companies to provide exceptions for consumers whose credit information has been directly influenced by extraordinary life events, such as catastrophic illness or injury; death of a spouse, child or parent; temporary loss of employment; divorce; or identity theft. In such cases, auto insurance companies may consider only credit information that is not affected by the event or shall assign a neutral insurance score.

Re: Improved FICO Scores = Lower Insurance Rates!

Thomas_Thumb — Sun, 28 Aug 2016 01:42:32 GMT

@Anonymous wrote:
@Btw, @Thomas_Thumb, congrats on the 850s! Any advice? I've read some perspectives that say the only way to a perfect score (besides what is obvious) is to have all four different types of credit. i.e. Installment, Revolving, Mortgage & Consumer Finance (which I assume is a personal loan or a personal line of credit?) Do you have any perspective on this?

Thanks.

What some say is needed for Fico 08 850 scores is a bit overblown.Also, a mortgage is a type of installment loan. Here is what I have:

1) A single open installment loan - which is a 15 year mortgage in my case. Mortgage is currently around 35% Balance to Loan Ratio. However, I still had 850 scores back when the ratio was above 50%

2) A total of 4 open revolving credit cards.(one of there is a Best Buy "store" card, not a Visa/Mastercard hybrid card).

3) A single AU revolving credit card (which Fico 08 ignores)

4) A single AMEX charge card - this is treated differently than revolving credit cards.

5) I have 1 closed store charge card and 2 closed credit cards on file in addition to the above. Prior paid and closed mortgage fell off report last year

I have no consumer finance account. No personal loan, personal line of credit or home equity line of credit required.

So what do you really need for an 850 Fico 08? Not 100% sure but the following is foundational:

1) A clean file - no delinquencies or derogatories

2) One open installment loan that has established payment history and/or is substantially paid down but not paid off.

- For a mortgage a balance to loan ratio (B/L) under 60% is sufficient.

- For a share secured loan it appears that B/L needs to be under 10%. Perhaps because this type of loan has a much shorter time horizon than a mortgage.

Note: mortgages ARE coded and categorized differently from other installment loans on credit reports.

3) Three (or more) revolving credit cards (not AU)

4) Is another type of account needed? I don't think so but I do have a charge card which is a different type of account. So, I can't confirm lack of need.from personal experience. I do know others who have reported 850s without a charge card but they had some other type of open account such as a car loan in addition to a mortgage.

Certainly 3 types of open accounts are sufficient for 850s such as

a) Mortgage, revolving credit cards and charge card

b) Mortgage, car installment loan and credit cards.

Re: Improved FICO Scores = Lower Insurance Rates!

Anonymous — Mon, 29 Aug 2016 01:56:57 GMT

Great information, thanks for taking the time to post. Everyone seems to talk a lot about utilization, but hadn't heard anything about B/L which is helpful. I have an auto loan that's at about 62% and three student loans that are at about 90%. My total debt is only about $25k, so I've thought about doing some balance transfers on cards that have 0% for 12mos to save on interest and pay down balances. I also didn't know that FICO measures charge cards differently. Do you have a preference between AmEx Platinum & PRG?