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## (Car) Insurance Rates

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Super Contributor

## Re: (Car) Insurance Rates

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,

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Valued Contributor

## Re: (Car) Insurance Rates

@CreditGuyInDixie 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?

Message 12 of 18
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Super Contributor

## Re: (Car) Insurance Rates

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.

Message 13 of 18
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Valued Contributor

## Re: (Car) Insurance Rates

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.

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Super Contributor

## Re: (Car) Insurance Rates

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.

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Valued Contributor

## Re: (Car) Insurance Rates

@CreditGuyInDixie 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).

EQ8:850 TU8:850 EX8:850
EQ9:850 TU9:850 EX9:850
EQ5:809 TU4:789 EX2:819 - 2019-09-06
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Senior Contributor

## Re: (Car) Insurance Rates

@juniebrunner 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.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 17 of 18
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Frequent Contributor

## Re: (Car) Insurance Rates

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

My credit .... It's over 9,000!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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