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September 23, 2008


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My husband and I have exceptional credit scores, however, I think using your credit score for insurance discounts is bogus. We are actively trying to pay off all debt and will NOT be using any debt in the future (except for a possible mortage). Once all of our debt is eliminated, our credit score will drop drastically. How is it fair that because we were prudent with our finances that we get penalized on the cost of insurance? I think the use of a FICO score for insurance costs is ridiculous....

Well, that's cool. My homeowner's insurance just came up for renewal, and in spite of our excellent credit score (both my wife and my score is over your 739 threshold), the rate was going up. I shopped around a little bit and dropped my premium by about 50%.

Actually I don't find anything to be happy about with this news. It is another example of how we have allowed credit scoring to take over all aspects of our personal financial life. It won't be long before insurance companies convince Fair Isaac, Experian and others to include your insurance claims history as part of your overall "credit score." Why? To further intimidate policy owners against making claims. Eventually they will just change the name of the score to "consumer rating score." Sadly, we follow along like sheep and let it happen.

Perhaps one good thing that might flow from the current financial crisis is that people will re-focus on true metrics of financial stability, such as net worth and positive cash flow.

Sarah --

We've had no debt (not even a mortgage) other than credit cards (which we pay off every month) and have a great credit score.

I have not had a mortgage on my home since 1986 and no other loan (auto) outstanding since 1988. I have used credit cards but have always paid the full balance monthly----and have always qualified for the "Premier Discount" described above....So I don't see not having debt as an issue.

I also don't see having no debt as being an issue. I don't have a mortgage or any credit cards or car loans, etc. and my score is 801.

My question is, can we find out our score and get a discount without our insurance company notifying us of it first?

Mind if I ask which insurance company this was with? For 44%, I'd seriously consider switching!

Glen --


AAA of Michigan for me.

Enjoy it while you can. If the State Supreme Court upholds the appellate court ruling, insurance discounts based on credit will be illegal in this state. Not sure how I feel about that. On the one hand, it does seem unfair. On the other, well, I get the discount.

I don't know the exact details, but I was trying to get a price quote from and found their quote to be about what I was paying with Farmer's insurance. But, I hadn't entered my SS# for security reasons. Later, I decided to try it wit my SS# and found the new quote was nearly half. I can only assume it was due to my credit rating. Now, I'm looking for a new home owner's insurance since Farmers jacked that up after I left them for car :(

Don't forget to check with Erie Insurance for car and home. They have annual premiums for car insurance, instead of semi-annual.

I have a FICO of about 630. My office mate has a FICO of 810. Our ages are about 4 years apart and our insurance claims history are identical (no auto/home claims for 5 years).

My insurance risk score is AA 04 and HH 06
His insurance risk score is AA 21 and HH 19

Those ratings are from one of the big insurance companies. There is another insurance risk profile called FARA and FACET used by an insurance company that a previous post references.

FICO 630 -- My FARA is a D (70% of base premium)
FICO 810 -- His FARA is a J (105% of base premium)

So, how does my lower credit score get me better insurance rates? Because insurance credit risk modeling is based on a different set of logarithms than is your FICO. To over-simplify the issue: people with credit cards are more likely to file a claim. Higher CC balances increases rate of claims. People with 2 car loans are more likely to file a claim. People with nothing but a mortgage loan are LESS likely to file a claim.

There are dark rooms in bomb-proof basements where people with no living family are working on super-secret formulas to rate your insurance. I'm exaggerating, but I'm sure they are closely guarded industry secrets that are protected from company to company. Shop around every 2-3 years.

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