ALL >> Insurance >> View Article
Using Credit Scores To Set Insurance Premium Rates

When you look around your neighborhoods, it's hard to find any good news. Friends and neighbors may have lost their jobs or be on short-time. There are foreclosed properties on every street. Shops and businesses have been closing down with increasing frequency. These are the signs of a real recession where unemployment and poverty stalk the land. The cause of all this pain is not hard to find. We have all been living beyond our means. When the banks and credit card companies offered us more money to borrow, we just took it. Why bother to save when the value of our homes only goes up? Let's plan for our retirement by borrowing cheap money and buying stocks and other more risky investments. No-one ever loses if they follow the advice of the credit rating agencies. Well, we know better now. What goes up can also come down. What is given a triple A rating can be junk tomorrow.
In the midst of all this chaos, the credit card operators have been cutting back on the borrowing limits. This has forced pain on us for two reasons. Firstly, finding the money to pay down our debts more quickly means redesigning the family budget. ...
... Sacrifices have to be made. Secondly, the way the credit score is calculated depends in part on the extent to which we use the credit cards we have. If the limits are reduced, we look like bad risks because the amount borrowed is closer to the limit. We have less money available to borrow and cut down on card usage so we can repay faster. Put the two together and the score falls. This is a direct criticism of the methods used to calculate the scores. It produces a fundamentally unfair result during a recession.
This would not be a problem if the credit score was only used by banks and credit card operators. But it's also used by companies to help decide whether to employ you, by landlords deciding whether to rent to you and by insurance companies deciding whether you are a responsible person. National figures show more than half all insurance companies use credit scores as a key factor in deciding your premium rate. This is extraordinary. There is only one possible effect of being in debt when it comes to the way in which you drive. If you cannot afford to repair your vehicle, you drive defensively to reduce the risk of an accident. Some states like California and Massachusetts have banned the use of credit score for this purpose, but they are a minority. They cite discrimination as a reason for the ban. The majority of the population without access to banking services and credit cards fall into minority racial groups. When they do not have a credit score, they are forced to pay a higher premium simply because of who they are, not how they drive. So, when you are looking for affordable cover, get the maximum possible number of car insurance quotes to find the best policies. If you live in a state which refuses the regulation of the car insurance market, contact your local government representatives and tell them how much pain you are suffering because of this unfair use of credit scores.
Add Comment
Insurance Articles
1. What Happens If Your Clarinet Is Lost Or Damaged By An Airline?Author: musicinstrumentsins
2. Classic Car Auto Insurance In California: Protect Your Vintage Ride
Author: Namaste Insurance Agency
3. How To Choose The Best Insurance Plan For Your Musical Instrument Repair Business?
Author: victor12johnson
4. How Cloud-based Invoicing Services Streamline Financial Management
Author: SourceThrive
5. What Happens When You Don’t Insure Your Audio Gear?
Author: micheljordan4
6. The Hidden Risks Of Not Insuring Your Musical Instrument
Author: musicinstrumentsins
7. Finding The Right Financial Advisory Partner In India
Author: Drishti Desai
8. How Climate And Weather Conditions Can Affect Your Brass Instrument?
Author: victor12johnson
9. Understanding Insurance Endorsement: Types And Key Benefits
Author: Stellanova GlobalTech
10. The Impact Of Violin Music On Brain Development And Emotional Health
Author: micheljordan4
11. Playing Gigs Or Teaching? Why Professional Flutists Need Extra Coverage
Author: musicinstrumentsins
12. How To Obtain And Interpret Your Insurance Loss Run Report
Author: SourceThrive
13. Handling Out-of-network Billing In Ascs: Best Practices
Author: Charlie Robinson
14. The Importance Of Business Interruption Insurance For Music Dealers
Author: victor12johnson
15. Rhc Billing Tactics For Medicare As A Safety-net Provider - 24/7 Medical Billing Services
Author: Charlie Robinson