topic Re: (Car) Insurance Rates in General Credit Topics

(Car) Insurance Rates

Anonymous — Tue, 08 Nov 2016 19:14:38 GMT

Does anyone know how often insurance companies check your credit? I think my credit is WAY better than when I signed on with Progressive 2.5 years ago. I'd like to get a better rate and was curious if anyone could say.

Do I just call up and speak to an agent and tell them that? To run my credit (which I am assuming is a soft pull)...

Re: (Car) Insurance Rates

Anonymous — Tue, 08 Nov 2016 19:36:28 GMT

That's a really interesting question. Just for clarity, when you say "talk to an agent" I am assuming you mean talking to an agent at Progressive. Right? You are not at this point talking about shopping for quotes at other places -- you just want to see if your existing insurer might give you a better rate.

Another way to ask your question is: How often does one's current auto insurer pull your credit? Do they do it every six months (i.e. when they give you a new quote)? Is the answer that this varies widely from insurer to insurer? (State Farm might only check once, Geico checks every time, etc.)

One thing you may want to be aware of is that few auto insurers actually pull your FICO score. Instead they rely on a score that was created for the auto insurance industry. This scoring model is based solely on your credit report, but it has different factors and concerns than does FICO. (Some of the concerns are the same -- in both models for example, late payments are bad, collections are bad, high CC utilization is bad, etc.)

There are two main scoring models that are used. One is an auto insurance score made by TransUnion. The other is an auto insurance score made by Lexis Nexis. The TU score is free via Credit Karma. It is squirreled away in an obscure portion of their site but you can get it.

The LN score costs you money each time you ask for it and you have to go through LN.

If I were you I would start by taking a look at the free score via Karma. Just remember it is not the big TU score that you see as soon as you sign in. You have to navigate to the right place.

Contributor Thomas Thumb knows a lot about the auto insurance scores. Hopefully he'll see your post and will tell you more if you like.

Re: (Car) Insurance Rates

Anonymous — Tue, 08 Nov 2016 19:49:14 GMT

I have my CK scores in addition to having my ACTUAL scores via MyFico.

And yes, I meant talking to a Prog agent not shopping for new ...

Re: (Car) Insurance Rates

Anonymous — Tue, 08 Nov 2016 20:48:10 GMT

My insurance is REALLY expensive because of speeding tickets. My score increased over 150 points and I called and it was reduced by almost $90 a month. They soft pulled my Transunion. I'm very friendly with my agent and he said that we should not just let our insurance renew automatically but call to get a new quote before the policy expires.

Re: (Car) Insurance Rates

Anonymous — Tue, 08 Nov 2016 20:50:06 GMT

@Anonymous wrote:
I have my CK scores in addition to having my ACTUAL scores via MyFico.

And yes, I meant talking to a Prog agent not shopping for new ...

The CK scores you are talking about (see blue text above) are probably the big Vantage Scores (one for TU and the other for EQ) that you see first thing when you log onto Credit Karma.

These are not the scores I am talking about. I am talking about a very specialized score that was made solely for the auto insurance industry. You can find it by first logging on to Karma with your username and password. Then, after you have done that, click here:

https://www.creditkarma.com/myfinances/scores/insurance#auto

I encourage you to read again that overview I gave you of how these scores might be very different from Vantage and FICO. For one thing, they have a different range. Here's what the different ranges mean for the TU Auto Score, translated into the letter grades we all got when we were in high school:

A = 900-950

B = 850-900

C = 800-850

D = 650-800

F = Under 650

Your TU Auto Score might be different from your Lexis Nexis Auto Score... but at least the TU score is free.

If you have had Credit Karma for a long time, you will be able to see what your auto score has been like for the last few years. If you can see that it has gone up a lot, then it may make sense to give your insurer a shout and ask them when is the last time they pulled it.

Re: (Car) Insurance Rates

newhis — Tue, 08 Nov 2016 23:08:50 GMT

@CreditGuyInDixie, I learn something new every day. Thank you.

DW has TU FICO 800 and Insurance 833, so is only a C.

Now I have to check what can she do to increase the score to B at least.

Re: (Car) Insurance Rates

Anonymous — Tue, 08 Nov 2016 23:21:25 GMT

Thom Thumb and I are both interested in gathering data that might made recomendations meaningful. The insurance scores do care about some of the same things that FICO and Vantage care about: no derogs, low utilization, etc. So the first step for anyone is to work on improving his or her basic FICO score. Additionally, however, the insurance models have some things they care about especially.

For example, the insurance models don't like it if you have any auto accounts (e.g. Pep Boys, Autozone, etc.) or Store Cards (Macy's, JC Penneys, etc.) or finance company accounts (Rooms To Go, etc.).

They also like it when your average credit limit on major credit cards is high (over $10,600 I think).

They are hyper sensitive to a person opening any new accounts -- which is probably what has got my TU insurance score at 850. (Pretty low, given my FICO is very high.)

Re: (Car) Insurance Rates

newhis — Wed, 09 Nov 2016 15:55:02 GMT

DW has JCPenney card and the limits are below 10k. So there still work to do.

Re: (Car) Insurance Rates

Anonymous — Wed, 09 Nov 2016 16:59:22 GMT

Your DW would be (in my opinion) a really helpful case study for us. I was thinking about this late last night.

She has a TU FICO 8 of 800 (extremely high) and a TU Auto Insurance Score of 833 (not even a C+ rating). What seems to clearly imply is that she is doing badly on the factors that are in the Insurance model but not in FICO 8 (or have a substantially different weight).

Would you or she be willing to answer some questions about her profile? If so, it might help us identify what it is about the TU insurance model that penalizes a person (but doesn't in FICO 8).

Re: (Car) Insurance Rates

newhis — Wed, 09 Nov 2016 17:18:55 GMT

Yes, we can answer some questions. Here is some more information about her profile:

- clean reports, started early 2014, first TU score 720, lowest 705 most recent 800

- never a car insurance in the USA until mid 2015

- car loan mid 2015, TU FICO 740 (from aproval), TU auto insurance 800 (CK historical information)

- car loan at 75% this month

- in the garden since December 2015

- highest util on a card 39% (BT until mid 2017), second at 14% that will be paid in January (0% promo ends), the rest below 5% or 0%

- several AU on my cards

- only store card JCPenney

Re: (Car) Insurance Rates

Anonymous — Wed, 09 Nov 2016 17:39:35 GMT

What is the age of her oldest account? Is her oldest account a credit card or an installment loan?

What is her average age of accounts?

When was her most recent account opened?

How many open accounts does she have?

What is her total number of accounts (closed and open together)?

Of these, how many were opened in the last 24 months?

How many inquiries does she have? Include any in the last 24 months. Helpful would be telling us how many are very recent (< 90 days).

What is the average credit limit of her major credit cards? To compute this, include closed credit cards but give them a credit limit of $0. Thus if she has two closed cards and a Visa with a CL of 1k and a Mastercard with a CL of 3k, then she has an average CL of $500. ($1000 + $3000 = $4000. Divide that by 4 to get $500.)

Does she have any auto accounts? (Pep Boys, etc.) How many?

Does she have any finance company accounts? How many?

Does she have any store cards? How many?

All those questions are related to reason codes for penalties given by the Lexis Nexis Insurance model. The TU Insurance model may be similar. The big ideas are recent credit, average CL of major cards, store cards and auto accounts,

Re: (Car) Insurance Rates

newhis — Wed, 09 Nov 2016 18:08:49 GMT

@Anonymous wrote:
What is the age of her oldest account? 2.75 years Is her oldest account a credit card or an installment loan? credit card

What is her average age of accounts? almost 2.1 years

When was her most recent account opened? December 2015

How many open accounts does she have? 14 accounts (AU included)

What is her total number of accounts (closed and open together)? 16 accounts (AU included)
Of these, how many were opened in the last 24 months? 9 accounts (AU included)

How many inquiries does she have? 2 older than 1 year Include any in the last 24 months. Helpful would be telling us how many are very recent (< 90 days). 0 < 90

What is the average credit limit of her major credit cards? To compute this, include closed credit cards but give them a credit limit of $0. Thus if she has two closed cards and a Visa with a CL of 1k and a Mastercard with a CL of 3k, then she has an average CL of $500. ($1000 + $3000 = $4000. Divide that by 4 to get $500.) Do I include AU?, my limits are higher and charge cards as $0?

Does she have any auto accounts? (Pep Boys, etc.) How many? 0 accounts

Does she have any finance company accounts? How many? 0 accounts

Does she have any store cards? How many? Only 1

All those questions are related to reason codes for penalties given by the Lexis Nexis Insurance model. The TU Insurance model may be similar. The big ideas are recent credit, average CL of major cards, store cards and auto accounts,

I think I have to include AU cards and charge cards as $0 limit, right?

Re: (Car) Insurance Rates

Anonymous — Wed, 09 Nov 2016 19:18:36 GMT

Great questions about how exactly the average credit limit calculation works. All I have to go by is what is on the actual text of the reason code, and it doesn't specify how charge cards and AU cards are considered in this computation.

I am really surprised to see how stratospherically high your wife's FICO 8 score is with such a very young profile. (Oldest account is 2.75 years.) Interesting.

Given the answers you gave, I can say with some confidence that your wife's comparatively low insurance score owes to her low age of oldest account and high incidence of new accounts. (Her most recent account was opened < 12 months ago and over 50% of her accounts were opened in the last 24 months.)

There is also some score harm being caused by the presence of a store card, though it's hard to say how much.

If you wife thinks she will not be applying for credit for another couple years, I would bet that in itself will help her a lot. Her AAoA will go up, her most recently opened account will be > 25 months old, most/all of her accounts will have opened > 25 months ago, and all her inquiries will fall off her reports. The insurance models appear to be unsually sensitive to "new credit."

Note: In your response, you indicate how many inquries she has that are over 365 days old and you indicate how many are < 90 days old. But you do not mention how many are between 90 and 365 days. I am guessing she has at least a few, since she has open a lot of accounts in the last few years.

If your wife actually really likes the JCP card, or if it is one of her two oldest cards, then I'd keep it. Otherwise she may wish to consider cancelling it. (There's pros and cons here, but your wife does have a lot of open credit cards already.) Bear in mind that she may not get the full benefit to her insurance score until the closed JCP account drops off her report.

She can also gradually solicit credit line increases on all her open credit cards, which will help her on her average credit limit (ACL). Again, the insurance models have not been well tested so nobody knows how significant the penalties are for having a low ACL. So as always with credit line increases, make sure your CLI request is a soft-pull request and also don't stress out about it. Just gardually increase the ACL over time. The official reason codes seem to say that all penalty stops when one's ACL exceeds 10.5k.

Final reminder:

Size of credit limit (e.g. ACL), presence or absense of store cards, extreme sensitivity to new credit, etc... these are aspects of the insurance scoring models. They are not part of any FICO scoring models.

There are even stranger factors inside the insurance models than these, btw. For example, a person get penalized if his oldest account is an installment loan rather than a credit card. That's true for me. Lexis Nexis also apparently objects to the Mark of the Beast, and therefore penalizes you if your total debt is > $666.

Re: (Car) Insurance Rates

newhis — Wed, 09 Nov 2016 19:39:38 GMT

In last 24 months she has 0 INQ EQ, 2 TU and 5 EX. The 2 TU are older than 12 months.

A few of her "new" cards in the last 2 years are AU.

Average limit with AU and putting charge/closed at $0 limit is $8,500, without AU is $6,500.

She uses her JCP around 4 times a year. She started with $400 limit, now is $10k, the card is over 2 years.

She plans to get Freedom U next year. Once EX goes over 800, I guess that will happen when a couple of INQ drop. I don't think she will get a SL > $10.5k. Her oldest account will be little over 3 years.

Her oldest account is BofA and I don't think that limit will grow without HP. She is trying SP CLI on some cards.

Before we started building our credit in the USA we didn't know that 800 FICO was possible in less than 3 years. I guess 800 is possible by opening 2-3 cards and a secured loan, nothing else after that in 2 years.

Re: (Car) Insurance Rates

Anonymous — Wed, 09 Nov 2016 22:25:44 GMT

BTW, if you guys are residents of Massachesettes or California, insurers will not use credit scores to influence policy rates or decisions for you.

Here's an interesting article from Consumer Reports on the whole subject.

http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

You no doubt know by now that, for credit cards, auto loans, and mortgages, anything above a certain fairly low score is considered equally good by the actual lenders making decisions. (E.g. anything above 740) I wouldn't be surprised if the same thing is true for insurance scores. Thus your wife's insurance score may already be good enough, even though it is just a grade C.

My own personal bar is for me to aim for a B or better on auto insurance and an 800 or better on FICO 8.

Re: (Car) Insurance Rates

iv — Thu, 10 Nov 2016 20:40:25 GMT

@Anonymous wrote:

You no doubt know by now that, for credit cards, auto loans, and mortgages, anything above a certain fairly low score is considered equally good by the actual lenders making decisions. (E.g. anything above 740) I wouldn't be surprised if the same thing is true for insurance scores.

It seems that, due to the nature of insurance, there may be more of a gradual slope of score vs premiums charged, in an inverse relationship. (With mortgages rates, card APRs, etc - there are a very small number of possible "slots" to fit into. Insurance premiums are much more "flexible".)

As a single (not very useful) datapoint, the last time I setup a new home insurance policy, my agent was shocked at the (low) rate charged for the property value/additional coverage. He couldn't figure out how his system was spitting out a premium that low (and he certainly doesn't focus on "subprime"-style insurance).

Unfortunately, he was unable to provide the scoring used for the calculation, and I only have the TU Home score from that day (932, via CK history chart), not an LN Attract, so direct comparision there isn't possible.

From talking to the agent, though, he doesn't tend to see "jumps" in premiums between clients as though there was a quantized function in play, more of a wide distribution of premiums, based on (presumably) scores, property replacement values, areas (how close the local FD is, etc)...

With auto insurance, of course, there is also the "good driver" factor that can be considered (for every driver in the household), along with car type, probably making the car insurance credit scores slightly less important vs the other factors (a driver with 10 points on their license, driving a 458 Speciale, is going to pay lots more than a "boring" driver with a 4-year-old Accord... regardless of credit score).

Re: (Car) Insurance Rates

Thomas_Thumb — Sun, 13 Nov 2016 04:38:06 GMT

@Anonymous wrote:
Does anyone know how often insurance companies check your credit? I think my credit is WAY better than when I signed on with Progressive 2.5 years ago. I'd like to get a better rate and was curious if anyone could say.

Do I just call up and speak to an agent and tell them that? To run my credit (which I am assuming is a soft pull)...

Insurance companies basically never check your credit score once you have a policy. The only triggers are a claim, an incident (speeding ticket, DWI) or request by the policy holder.

My State Farm policy includes text that says they use CBIS scores and that the policy holder can request a policy review with updated CBIS scores once every 6 months. Of course, my insurance agent was and still is clueless about CBIS. You may need to have dialog with a CSR at your insurance company in addition to your agent.

FYI - see below paste for impact of CBIS on premiums.

Re: (Car) Insurance Rates

Anonymous — Sun, 13 Nov 2016 19:06:56 GMT

I had a 600 score and got dropped from State Farm for tickets. So I went to progressive and then esurance and was paying out the yin yang ($251/ month).

I got my scores in the 700s and called progressive while my esurance was about to end coverage and said soft pull my score and tell me what can you do me for?

I am now pif 6 months progressive gold membership for $650, with collision, liability, low deductable, towing, everything I wanted. Having the better score gave me a much better rate, it works out to $108.33 per month if I were to do monthly, as apposed to $251 two years ago.

Don't just apply online, call a human, they'll try to work with you. Fwiw geico gave me horrible prices and were honest that they wouldn't budge regardless of credit score, so I took business elsewhere I used Nationwide in highschool until I got in a wreck and learned they don't replace with oem parts. And state farm dropped me after decades of on time bills, may they burst in flames. I drive a lot safer now