topic Re: "Credit based insurance score" in General Credit Topics

"Credit based insurance score"

tufa4311 — Tue, 04 Oct 2016 01:06:58 GMT

After applying for car insurance they did a credit check and my score was 830 out of 997 (range 200-997).

It says FICO no where.

I assume if it does not say FICO it is not a FICO and this is just a credit score come up with by the insurance agency (AAA)?

Re: "Credit based insurance score"

Thomas_Thumb — Tue, 04 Oct 2016 01:38:57 GMT

@tufa4311 wrote:
After applying for car insurance they did a credit check and my score was 830 out of 997 (range 200-997).

It says FICO no where.

I assume if it does not say FICO it is not a FICO and this is just a credit score come up with by the insurance agency (AAA)?

That would be a score that comes from LexisNexis. They are the dominant player for CBIS although Fico and TransUnion also offer CBIS.

http://www.thesilverlining.com/safety-resources/tips-to-help-avoid-losses/auto-tips/credit-based-insurance-scores

http://vermontmutual.com/images/pdf/insurance_score_FAQ.pdf

Re: "Credit based insurance score"

tufa4311 — Tue, 04 Oct 2016 01:45:00 GMT

The data in that graph is interesting - higher score = less accidents (or at least less claims)...a higher level of financial responsibility (and some luck) leads to more responsible driving and thus lower rates?

Re: "Credit based insurance score"

Thomas_Thumb — Tue, 04 Oct 2016 02:43:41 GMT

The data indicates cost per claim is relatively flat. The lower cost to insurance companies is due to the lower frequency of filing at higher CBIS. Why? - I believe it most likely relates to settling of accidents outside of insurance to avoid increased rates due to claims payouts.

LN CBIS does look at average CL per card as a scoring factor. Those with higher CLs per card likely have higher incomes and can afford to pay out of pocket ... if personal injury is not involved.

Re: "Credit based insurance score"

Anonymous — Thu, 06 Oct 2016 01:14:58 GMT

All I know is my insurance compay didn't give me the best rates because "Average age of accounts is less than 20 years"

Re: "Credit based insurance score"

StartingOver10 — Thu, 06 Oct 2016 02:35:35 GMT

@Anonymous wrote:
All I know is my insurance compay didn't give me the best rates because "Average age of accounts is less than 20 years"

Wow, pretty easy to have AAoA less than 20 years! Especially for the folks here on MyFICO! Bolsters the theory that insurance co's will seize on anything to not give the best rates.

I have been with the same auto insurance co since 1991. They raised my rates last year for two reasons:

I moved into a different zip code - same county, same everything else
My husband, who doesn't drive and doesn't live with me (for more than 5 years) is older than 70 years so they increased my insurance premium. They still charge me for him because we are still married, but he doesn't even live in the US any longer. He retired. This is considered a negative by insurers apparently.

I am astounded that you are dinged for an AAoA less than 20 years.

Re: "Credit based insurance score"

Thomas_Thumb — Thu, 06 Oct 2016 06:05:27 GMT

@StartingOver10 wrote:
@Anonymous wrote:
All I know is my insurance compay didn't give me the best rates because "Average age of accounts is less than 20 years"
Wow, pretty easy to have AAoA less than 20 years! Especially for the folks here on MyFICO! Bolsters the theory that insurance co's will seize on anything to not give the best rates.

I have been with the same auto insurance co since 1991. They raised my rates last year for two reasons:
I moved into a different zip code - same county, same everything else
My husband, who doesn't drive and doesn't live with me (for more than 5 years) is older than 70 years so they increased my insurance premium. They still charge me for him because we are still married, but he doesn't even live in the US any longer. He retired. This is considered a negative by insurers apparently.
I am astounded that you are dinged for an AAoA less than 20 years.

mryflyguy,

https://consumer-solutions.custhelp.com/ci/fattach/get/2930352/0/filename/Attract+Auto+3+0+Expanded+Messages.pdf

Attached above is a link to LexisNexis Auto reason codes and a paste of a couple relating to age. Based on what I read, top rating in the "average months accounts have been opened" is 16 years, 2 months or longer. Not sure what your average age is but I doubt that is the primary reason for a less than "ideal" rate. Most agents haven't a clue on how this works and just re-iterate some reason code that gets listed without knowing (or caring) about true cause. Just because a category is not at maximum does not mean it will affect rates.

Shown below are some scoring buckets used by one insurance company to set rates. For this company, your overall score of 830 is still top tier but, each insurance company sets its own standards

Here is a link to an interesting article on CBIS and a paste of a chart from a referenced article.

http://www.onlineautoinsurance.com/learn/what-insurance-score/

http://www.onlineautoinsurance.com/research/nevada-credit-rating-study/

Note: There are alot of other considerations, outside of CBIS, that may be playing a role - including where you live. Some agents may use CBIS as a scapegoat on why you did not get a better rate..

Re: "Credit based insurance score"

Anonymous — Thu, 06 Oct 2016 18:08:12 GMT

Hey Thom Thumb. I was looking through these LN Auto reason codes a couple days ago. I remember you and me and some other folks talking about them toward the end of last year.

It would be really nice if somebody could put together a guide of simple easy to understand and actionable tips for how a person might attempt to raise his LN Auto score. I am not sure anybody has ever done that here on the forum. I know I would certainly benefit from having something like that.

Here's an analogy to what I am talking about. A person could know almost nothing about FICO scores, and I could give him a few actionable tips that would help him a lot.

* All cards at zero except one; keep a small positive balance on the remaining one.

* Pay all your bills on time.

* If you don't have an installment loan, get a share secure loan -- here's how.

etc.

There's ways that the LN Auto score differs substantially from the FICO model, as you know. But I don't know how much weight it places on these differences. E.g.

Doesn't like store cards (macy's, JC Penneys, many others)

Doesn't like auto accounts (Pep Boys, etc.)

Doesn't like it when you have a low average credit limit amongst your cards

There's a few weird items I get spanked about that I can't fix, e.g.

* Wants your oldest account to be a credit card. Spanks you if it is a loan (my oldest account is a student loan).

I am doing pretty good with a lot of the LN-specific factors: I have no retail cards/accounts of any kind, no auto accounts, no finance company accounts, and my average credit limit is pretty high. (They like you to have one > $10,533 which I think mine is by a nose.)

As far as average age of accounts, it looks like about half of the AAoA penalty reason codes include the following explanatory language:

Insurance industry research shows that consumers whose accounts have been established on average for more than 7 years 7 months have fewer insurance losses.

and there is also this language repeated in some other reason codes:

Insurance industry research shows that consumers whose oldest account was established more than 14 years 7 months prior to the date the score was generated but whose average account age is less than 7 years 8 months experience more insurance losses

That suggests that an AAoA of 7.7 is a breakpoint (for LN) where you get some scoring help. That's a reasonable and actionable goal for me: to keep my AAoA > 8.0. The other AAoA action codes are not realistic for me: I am never going to have an AAoA > 16.2 and don't plan to chase it for a phantom LN benefit. An AAoA of 8.0 is a sound goal for FICO though too so it seems worthwhile.

Can you suggest anything else I could be doing to improve my LN score? (Aside frrom the stuff we know is helpful from a FICO perspective: pay your bills on time, keep CC utilization low, etc.)

It looks to me like LN punishes you additionally hard for very recent inquiries (last few months) and also that it includes inquiries that are well past a year old.

There's a fascinating family of reason codes that incude language like this:

% of Open Credit Union, S&L, Mortg Accts to Total Opn Accts is 10.00% or Less

14.30% or More of Opn Crdt Union,S&L,Mort Act to Ttl Opn Accts is Better

1. What information is this message derived from? Of all the accounts that are
considered open, the percent of those accounts that are open credit union, savings &
loan, or mortgage accounts. An account is considered open if it has been reported in the
last 12 months and has not been reported as closed. Installment type accounts must
have a balance to be considered open.

2. How does this affect my insurance risk score? Insurance industry research shows
that consumers who have a higher proportion of their active accounts with a credit union,
savings and loan or mortgage experience fewer insurance losses.

It sounds like it is a way of punishing people who have way more open credit cards than they do installment loans (mortgage, car loan, etc.). But I can't tell whether a car loan with a major bank (not a credit union or an S&L) would be counted favorably. Looks like not. I assume that LN is not considering open bank accounts (savings, checking, etc.) since those aren't on the major three CRAs, but can't say for sure.

It also looks like LN doesn't like you ideally to have more than 5 open accounts period -- credit cards or loans. Well, that is not gonna happen for me. I may be able to keep my total open accounts under 16, which they seem to want.

An easy actionable thing that they give you points for is lowering your total amount owed on all accounts to under $666. They apparently object to the Sign Of The Beast. The $666 figure doesn't count mortgages. So I can personally do that if I am applying for insurance -- that would be easy for me.

I note that they combine CC and installment utilization on a family of factors and like it best when you are under 6.22%. (Again, not counting mortgages.) I can do that easily, if I were prepping for an insurance quote. In another family of factors they seem to specify that the ideal threshold is under 2.67%

They also divide the total number of recent accounts (< 2 years) by your total number of open accounts and get a %. They like that to be under 11.11%. Not gonna happen for me for a while since I have opened a fair number of credit cards in the last 18 months. But eventually that may be doable. The worst window is if you are over 150% (!).

Re: "Credit based insurance score"

Thomas_Thumb — Fri, 07 Oct 2016 17:46:48 GMT

CGID - I'd be happy to edit your rough draft on CBIS once it's avaliable

CBIS is a bit tougher to evaluate cause/effect because very few people obtain the scores and it costs money to do so. A general strategy based on reason codes does have merit but, no real way to estimate impact of "improvements" on score without testing.

I did a couple before/after on removal of a closed store card from my file for LexisNexis CBIS (which uses data from EQ CRA). However, LN Auto score + report and LN Property score + report are separate transactions and each report cost $12.95. Also pulled a set of scores direct from TransUnion as they also provide CBIS. The only score you can get for free is the TU Auto through Credit Karma. My scores were:

CBIS Category	LN 10/17/2015	LN 12/3/2015	TU 10/28/2015
Auto/Auto	873	900	902
Property/Home	855	870	950

Have you ever pulled LN CBIS scores? If so, do you mind sharing?

Re: "Credit based insurance score"

Anonymous — Fri, 07 Oct 2016 18:47:15 GMT

I have not pulled mine. I should. Do they supply you with 3-4 reason codes, ranked in order of impact, that explain why your score is not as high as it could be?

I'll work with you on this via private messaging and we'll see what we can come up with You and I are in complete agreement about what the obstacle is to being able to say anything definitive about LN-Auto, which is the lack of a platform to test and restest and retest changes using a variety of people and profiles. (The cost is prohibitive.)

The TU model, by way of contrast, is free via Credit Karma -- isn't it? At least it used to be, back in the day.

Still, coming up with some advice purely on reason codes could be really helpful to folks. I'll stay in touch.

Re: "Credit based insurance score"

Thomas_Thumb — Fri, 07 Oct 2016 22:08:19 GMT

@Anonymous wrote:
I have not pulled mine. I should. Do they supply you with 3-4 reason codes, ranked in order of impact, that explain why your score is not as high as it could be?

I'll work with you on this via private messaging and we'll see what we can come up with You and I are in complete agreement about what the obstacle is to being able to say anything definitive about LN-Auto, which is the lack of a platform to test and restest and retest changes using a variety of people and profiles. (The cost is prohibitive.)

The TU model, by way of contrast, is free via Credit Karma -- isn't it? At least it used to be, back in the day.

Still, coming up with some advice purely on reason codes could be really helpful to folks. I'll stay in touch.

They supply 2 reason codes with the report/score. The codes have are hot linked to direct you to additional info. As mentioned they provide CBIS for Auto and Property - which are different. The TU Auto CBIS is free and can be accessed once you log on by clicking on the insurance button. Pasted below is are the primary summary pages for LN CBIS. The C.L.U.E report listing account details is on subsequent pages.

Re: "Credit based insurance score"

Thomas_Thumb — Sat, 08 Oct 2016 03:37:58 GMT

Shown below is how to get to the free TU Auto CBIS offered on CK.

First, go to the CK website and log in to your account per this link: https://www.creditkarma.com/

1) On initial screen click on "log in". The below shown "Log In to Your Account" pop up screen will then appear.

2) Enter your log in information. Then click on the log in button.

If, you don't have an account, you will need to create one as data from the TransUnion CRA is used to generate a credit based insurance score.

Now:

1) click on loans on main screen => new screen comes up.

2) Click on Auto loans => new screen comes up.

3) Click on insurance => new screen comes up and displays INS score in lower left area of the screen.

BTW - My TU CBIS score has been stuck at 902 the 12 or so times I have checked it since 10/2015. It appears to lack sensitivity to changes in profile data relative to LN - or I have hit a ceiling associated with some TBD deficiency.

Re: "Credit based insurance score"

elim — Sat, 08 Oct 2016 02:03:36 GMT

@Thomas_Thumb wrote:
Shown below is how to get to the free TU Auto CBIS offered on CK.

Click on loans on main screen => new screen comes up. Click on Auto loans => new screen comes up. Click on insurance => new screen comes up and displays INS score in lower left area.

BTW - My TU CBis score has been stuck at 902 the 12 or so times I have checked it since 10/2015. It appears to lack sensitivity to changes in profile data relative to LN - or I have hit a ceiling associated with some TBD deficiency.

I get a completely diferent screen only letting me apply for quotes. can you paste a direct link?

Re: "Credit based insurance score"

Thomas_Thumb — Sat, 08 Oct 2016 02:55:42 GMT

Elim,

I should have started from the beginning as many screens look the same.

You will not be able to get this score until after you have logged in as a member. Added log in steps to the above post. Hope this covers the missing steps.

P.S. Your Transunion CRA data is the only data needed to generate the TU credit based insurance score. The fill in the blank information above the score is only used for insurance rate estimates. You can look at how changes in that information affect rates but, it won't change your score - because score is based on CRA data at TransUnion.

Re: "Credit based insurance score"

Anonymous — Sat, 08 Oct 2016 03:06:32 GMT

Hi TT. Both the LN and the TU Auto scores rely on the data from a credit bureau. The TU Auto Score is of course generated purely off of TU data -- no data from EQ or EX has any effect on your TU Auto Score.

But as far as the LN score goes, where do they get their CRA data? Is it based on exactly one bureau? (If so, which one?) Or is it based on a merger of data from all three CRAs?

Re: "Credit based insurance score"

Thomas_Thumb — Sat, 08 Oct 2016 03:18:30 GMT

CGID,

LN uses data from Equifax but, they suppliment it with information they gather from other sources.

After all, LN is like a credit Bureau itself and must provide you with a free copy of their own credit report upon request yearly (subject to the same federal reg. as the "big 3").

As mentioned in the LN report shown above:

Your score of 900 is based upon your Equifax Credit Report as of 12 / 03 / 2015
Scores range between under 500 and 997.
Higher scores are considered better scores. If an insurance company evaluated you solely on your insurance score, you would be considered a GOOD risk.

Re: "Credit based insurance score"

elim — Sat, 08 Oct 2016 03:24:34 GMT

@Thomas_Thumb wrote:
Elim,

I should have started from the beginning as many screens look the same.

You will not be able to get this score until after you have logged in as a member. Added log in steps to the above post. Hope this covers the missing steps.

P.S. Your Transunion CRA data is the only data needed to generate the TU credit based insurance score. The fill in the blank information above the score is only used for insurance rate estimates. You can look at how changes in that information affect rates but, it won't change your score - because score is based on CRA data at TransUnion.

Yes I'm logged in but this is my insurance tab on CK (after following your steps)... link here

ETA: thanks thomas, looks like I have some Beta version. I have logged in to CK every week for 3 years and have never seen my ins score there. bummer. thanks again :]

Re: "Credit based insurance score"

iv — Sat, 08 Oct 2016 03:29:07 GMT

@Anonymous wrote:

But as far as the LN score goes, where do they get their CRA data? Is it based on exactly one bureau? (If so, which one?) Or is it based on a merger of data from all three CRAs?

It's Equifax data.

I don't have the reason codes handy at the moment, but the last time I pulled LN Attract scores mine were 854 Home and 913 Auto.

For comparison, my EQ FICO 8 was "down" to 816 that week (>20% utilization at the time).

The biggest issue with Attract score optimization advice is that many of the factors are inter-related and quite a few factors move at cross-purposes. Try to optimize for one set of reason codes, and it hurts you on others...

Re: "Credit based insurance score"

Thomas_Thumb — Sat, 08 Oct 2016 04:01:26 GMT

@iv wrote:
@Anonymous wrote:

But as far as the LN score goes, where do they get their CRA data? Is it based on exactly one bureau? (If so, which one?) Or is it based on a merger of data from all three CRAs?
It's Equifax data.

I don't have the reason codes handy at the moment, but the last time I pulled LN Attract scores mine were 854 Home and 913 Auto.

For comparison, my EQ FICO 8 was "down" to 816 that week (>20% utilization at the time).

The biggest issue with Attract score optimization advice is that many of the factors are inter-related and quite a few factors move at cross-purposes. Try to optimize for one set of reason codes, and it hurts you on others...

FYI - LN CBIS uses "Property" and "Auto". TU CBIS uses "Home" and "Auto".

Re: "Credit based insurance score"

Thomas_Thumb — Sat, 08 Oct 2016 04:15:21 GMT

@elim wrote:

Yes I'm logged in but this is my insurance tab on CK (after following your steps)... link here

ETA: thanks thomas, looks like I have some Beta version. I have logged in to CK every week for 3 years and have never seen my ins score there. bummer. thanks again :]

Pasted below is the screen sequence that should get you there. The Insurance score is NOT available upfront and therefore most people are unaware of it. However, it does exist as a standard feature and should be available for all members that have VantageScores. Unfortunately, one must navigate through multiple screens to find it.