Dear Insurance Adviser,
My insurer recently doubled my homeowners and auto insurance premiums. When I asked why, the company told me that my credit score had dropped from 815 to 735. Is this a reason to double the price of my insurance?
Credit scoring has been a factor in insurance pricing for several years now. But it’s extremely unlikely that a 10 percent drop in your credit score would double your rates on both your automobile and home insurance policies.
More likely, your rates would increase 10 percent to 20 percent.
Some of the increase could be due to just a general rise in rates — especially on homeowners insurance, which has been hit hard with storms the past few years. Your automobile insurance rates may have increased because of tickets or accidents in the family.
Your current credit score of 735 is still excellent and will qualify you for preferred rates in most insurance companies. The question before you now is not: Why did your rates go up? Rather, it’s: Are they still competitive? Ask your agent to shop your policies for you. That way, you can be sure that you have a true “apples-to-apples” quote.
Credit scoring has been a factor in insurance pricing for several years now. It is a fact that people with good credit have fewer claims. As long as that remains true, credit will be a factor in insurance pricing well into the future.
Ask the adviser