insurance co. bastages agin' me for using money wisely

[Marc Anthony]

I just recently got my car insurance renewal (Nationwide) and I happened to actually read some of the insert pieces they put behind the slip that goes in your car. According to the notice, I don't qualify for their best rate because of data from my credit report - they claim I have too many accounts and that they've not been open long enough.

My credit report is spotless (I've checked) and I have student and vehicular loans that have been on there in good standing for years, some as long as 13. Up until about a year ago, I didn't use a Visa/Mastercard card at all, and only then opened one up to take advantage of the reward points - I paid for most things with debit card. I have zero account balances on the 2 dept. store cards I have, and have always paid them on time.

Apparently, this all tabulates to a ding on my record worth screwing me out of more money, even though I also have a clean driving record and have been their customer for over a decade. Any major insurance companies not use the credit scroing malarkey anymore? I'm not a credit or driving risk and I really feel the need to not give them another cent if this is their business practice.

[graylocks]

you're not alone. found this on Clark Howards site:

Nov 01, 2006 -- Insurance industry fighting Oregon initiative
Did you know that an issue on the ballot in the state of Oregon could affect you? Citizens want to ban the ability for insurers to base your insurance rates on your credit score and Clark is 100 percent behind the move. Insurance companies are fighting this citizen initiative tooth and nail. That’s because they think this will cause a domino effect in other states. Right now, more than 90 percent of insurers use your credit score to set your rates. If credit report were at all accurate, Clark could see it making sense. But reports almost always contain errors, so people are charged higher rates when they shouldn’t be or they are denied coverage all together. Rates should be set based on driving record, age and gender. And, Clark hopes the insurance industry fails time and time again with this.

and this thread on his site's forum about someone in a situation similar to yours who fought it:

[Ken Sp.]

I wonder if you actually authorized them to check your credit report?

I thought companies had to get permission to check credit?

[AlphaDog]

[quote Ken Sp.]I wonder if you actually authorized them to check your credit report?

I thought companies had to get permission to check credit?
Nope. It's now part of "standard reviews" for most of them.

[JoeH]

Yeah, somewhere in the fine print you "okayed" them doing a number of things and the insurance companies where allowed construe that to include credit reports.

[M A V I C]

There's "soft pulls" and "hard pulls" - insur. cos do "soft pulls."

My insurance co does the same, but they don't require your score to be super high... I think you only need a 680 to get their top level. That gives you plenty of breathing room for mistakes.

[graylocks]

i just remembered that last year geico asked if they could check my credit rating; my rates went DOWN once they did.

[Jack D.]

OK. I'm confused. What does my credit score have to do with my driving record? If I don't pay the phone bill this will make me go on a rampage or something??? I hate insurance co's as a rule of thumb and as a MA resident I already give them MORE than my fair share as it is.

[AlphaDog]

[quote Jack D.]OK. I'm confused. What does my credit score have to do with my driving record? If I don't pay the phone bill this will make me go on a rampage or something??? I hate insurance co's as a rule of thumb and as a MA resident I already give them MORE than my fair share as it is.
The way it was explained to me, they view the credit score as a part of their assessment of "reliability" and "responsibility". Apparently they got the notion that people who have higher credit scores are generally more responsible and, ergo, less likely to get involved in an accident or have poor driving records. When you think about it objectively, there is some merit to the argument; however, like too many other things, there are always many very responsible people who have, for one reason or another, a less than stellar credit rating but who are very good and responsible drivers.

It's just another one of those examples of how one model is applied to everyone, with little or no accounting for individual variables.

[M A V I C]

[quote AlphaDog][quote Jack D.]OK. I'm confused. What does my credit score have to do with my driving record? If I don't pay the phone bill this will make me go on a rampage or something??? I hate insurance co's as a rule of thumb and as a MA resident I already give them MORE than my fair share as it is.
The way it was explained to me, they view the credit score as a part of their assessment of "reliability" and "responsibility". Apparently they got the notion that people who have higher credit scores are generally more responsible and, ergo, less likely to get involved in an accident or have poor driving records. When you think about it objectively, there is some merit to the argument; however, like too many other things, there are always many very responsible people who have, for one reason or another, a less than stellar credit rating but who are very good and responsible drivers.

It's just another one of those examples of how one model is applied to everyone, with little or no accounting for individual variables.
Overall, the method has been very successful. The first compared the two groups and found a significant overlap. Overall, my rates have gone down since they started doing this. Even if I didn't qualify for the biggest discount, it's still more of a discount than I was getting before.

This isn't like the Advantage/Express/Value/Savings... Cards at grocery stores where they charge you extra if you don't use their card.