Credit Based Insurance Score

What Does Credit Based Insurance Score Mean?

Credit-based insurance scores are calculations that many insurers use to assess the risk of insuring potential policyholders. These scores are derived from the credit history of the prospective policyholders. Insurers commonly use credit-based insurance scores because poor credit is often linked to a higher likelihood of filing insurance claims.

Insuranceopedia Explains Credit Based Insurance Score

Credit-based insurance scores are commonly used by auto insurers and companies issuing homeowners’ policies. Individuals with better credit are generally perceived as more responsible and less risky. As a result, a higher credit-based insurance score can often help a person secure insurance approval or obtain lower rates. Consumers should be aware that their credit history can influence their insurance coverage.