How your credit score affects the rates you pay for 4 major types of insurance

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Why would an insurance company want to know your credit score before offering you a policy?

Put yourself in their executives’ wingtips or heels. If you were essentially investing in somebody else’s auto, home, health or life risk, wouldn’t you want to know a little more about them?

“The insurer is looking to price the policy to reflect their risk,” says Michael Barry, spokesman for the Insurance Information Institute, a New York-based trade group. “They’ve found that people who manage their finances well also manage other important aspects of their lives responsibly.”

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Susan Wright, a St. Louis-based insurance expert and author, says insurers pull only certain aspects from your FICO credit score — including your payment history and total debt — to create what’s called your insurance score.

Auto and home insurers use this to weigh the likelihood that you’ll file a claim, miss a payment or attempt insurance fraud. Life and health insurers tend to focus primarily on payment history and the impact of your finances on your overall well-being.

Here’s how your credit score could affect your auto, home, health and life insurance rates.