Credit–Based Insurance Scores and the Cost to Consumers

Abstract

A CS (CS) can determine whether a consumer will or will not receive a loan for an automobile, house, or small business. The interest rate banks charge for loans, credit cards, and some employment opportunities, are dependent on a CS. CSs directly affect the cost of all types of insurance coverage, especially property and casualty. Insurance carriers are permitted by law in most States to use Credit- Based Insurance Score (CBIS) to determine premiums. The CS is not the same as the CBIS. We explicate the difference between a CS and a CBIS in this article. We help consumers of insurance products better understand how insurance carriers determine premiums based on CBIS. We share 10 recommendations tips to help consumers raise their CS’s and lower the cost of their insurance premiums by improving their CBIS. We also make recommendations involving other premium rating factors that may help in the event that their CS is compromised.