Posted: Mon Dec 31, 2007 4:51 pm Post subject: I was told
I was told that the price of insurance had to do with your credit. If you have good credit the insurance will be cheaper than if you have bad credit it is higher.If you have bad credit you may not be able to get insurance at all. How can that be? Sounds more like a loan than car insurance.
Insurance companies use credit ratings because a person with a lower credit score is more likely to _file_ a claim. This is a fact. So they use this information to hedge their bets.
A few states have done the right thing and made this illegal.
It should be illegal as credit ratings don't are not a good indicator of _risk_ and they are not directly related. Risk/Exposure is what the policy should be rated on.
A person with poor credit is more likely to _use_ the policy once they incur a loss. A person with a good credit rating (a person who can afford never to be behind on bills) most likely will use their own funds to settle losses and not involve the insurance company. One could argue that people with good credit ratings are more responsible. But this simply cannot be shown.
The reason why it's done... because the insurance companies are allowed to get away with it (in most states). It's just another way that poor people are discriminated against.
I thought another reason for 'hedging' bad credit scores (per the giants not saying it's right), is because the lower credit ratings also have higher instances of fraud...(?) or fraudulent claims (?) _________________ Have you been helped by a poster? Do you want to show your appreciation? YOU CAN !! Just simply click on the donate button and send them some coin!
Posted: Tue Jan 01, 2008 2:16 pm Post subject: Two Words
Charge Backs
It can take 2-5 years for an insurance company to realize a profit on a policy. And every body knows when money gets tight the first thing to go is the insurance policy. People with bad credit are more likely to dump their ploicies when money get tight. So higher rates and tougher underwriting. _________________ Mr. Steven Glenn Liggett Indemnity-Income.com
How can you find out if your state goes by this policy or not? Is there a webpage that lists the information. I have seen employers do credit checks on people in jobs that do not require people to handle money, It really throws alot of good candidates out of the pool.
Unfortunately, your insurance company wants to know if you pay your debts on time. Credit scoring has been a disaster for some insurance consumers. For some time now, insurance companies have basing the cost of your insurance policy on your credit score. Missing as few as two or three payments on credit cards, loans, child support, or other financial obligations could lead to your insurance premium being increased. If your credit score is unfavorable, you could pay more when getting an insurance quote. And, regardless of the time you have been with an insurance company or your loss history, a low credit score could lead to a higher insurance premium or possible loss of your policy.
So, "What does my credit rating have to do with my insurance premium?" Insurance companies feel that if you are not responsible with your money, then you are more than likely not going to be responsible on the road. Statistics show that people who manage their personal finances responsibly are more likely to manage other important aspects of their life with that same level of responsibility. That, many companies feel, would include being responsible behind the wheel of their car or being responsible in maintaining their home. Some disagree with this concept as they feel it makes life even more difficult for those who may already be struggling.
Is using someone's Credit Score for an Insurance Quote and/or an insurance policy unfair?
Opponents to this practice feel that using a credit score for an insurance quote or insurance policy premium is unfair and hurts only the working class. A large percentage of consumers who have low credit scores are blue collar workers. They argue that the low economy has put a strain on the large amount of America's working class. While struggling to pay for basic necessities they may miss a few payments, which in turn could make their insurance policy premium skyrocket. In many areas, public transportation is not available and individual transportation is a necessity. Also, in the case of many Americans who have no health insurance, a medical emergency could be even more devastating when one is having a hard time paying the medical bills and then come to find that their insurance policy premium has been raised tremendously because of a few missed medical payments. Opponents feel the new credit score system by insurance companies just makes the working class fall even further behind. _________________ Please feel free to go to my website at www.markcolbert.com or, if you have a specific question, you can email me directly. I hope I can answer any questions you might have. If not, I can certainly find an answer right away.
I do not like the credit score being used. I have a low credit score but have had no accidents in 12 years. And have had no tickets in the last 4 years. but I still get to pay that nice fat premium.
I do not like the credit score being used. I have a low credit score but have had no accidents in 12 years. And have had no tickets in the last 4 years. but I still get to pay that nice fat premium.
Are you sure this is the reason? All states do not allow this (credit rating) in their underwriting...re: good natured's question...look at your states DOI site, they generally will have a long explaination re: credit scores and insurance and if your state allows it....
I don't know how I feel about this....My concern has always been more on the claims side...What is the first thing that happens on a claim (nearly) when there is a theft or fire (vehicle or home) a credit report is run..why? to see how far behind on the bills the insured is re: fraud....
I can understand the responsiblity part, re: If you maintain your finances in a responsible manner, then follows you are more responsible in other areas....ie home and vehicle upkeep etc...don't know though that I buy at all that it makes them better or safer drivers.........
To me it seems rather silly that you would charge a person more that clearly has problems paying their bills....I have all the compassion in the world for those that TRULY struggle and are down on their luck...who hasn't been at one time or another? I have none however for those that feel the world owes them a favor and a living, and have all the money in the world to buy beer, cigs, rent movies, have every pay channel possible, but can't pay their car, health insurance, lights, gas, rent...etc. _________________ Have you been helped by a poster? Do you want to show your appreciation? YOU CAN !! Just simply click on the donate button and send them some coin!
I don't know how I feel about this....My concern has always been more on the claims side...What is the first thing that happens on a claim (nearly) when there is a theft or fire (vehicle or home) a credit report is run..why? to see how far behind on the bills the insured is re: fraud....
This is directly related to the loss and not used as a basis for determining risk.
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I can understand the responsibility part, re: If you maintain your finances in a responsible manner, then follows you are more responsible in other areas....ie home and vehicle upkeep etc...don't know though that I buy at all that it makes them better or safer drivers.........
Find something that shows this is true. You won't... as it can't be shown. What you _will_ find is that people with lower credit scores tend to file more claims. These are two different things.
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To me it seems rather silly that you would charge a person more that clearly has problems paying their bills
It's done all the time and is pretty much the bases of our commerce. "Stepping on the backs of the poor" is how almost all financial institutions make their money these days (banks, credit card companies, loan companies, etc)
tcope............Amen _________________ Please feel free to go to my website at www.markcolbert.com or, if you have a specific question, you can email me directly. I hope I can answer any questions you might have. If not, I can certainly find an answer right away.
Count me in too. Its like the banks charging a 35 dollar fee for a 2.00 debit with insufficient funds. I know people who have debit cards who use it and don't keep up with the money with a record book and over extend and have to pay charge after charge for all small amounts. The banks make their money this way. I don't think insurance companies should penalize people for falling on hard times but that is just what they are doing. I can remember when it was a choice to have insurance or not.
I can understand the responsibility part, re: If you maintain your finances in a responsible manner, then follows you are more responsible in other areas....ie home and vehicle upkeep etc...don't know though that I buy at all that it makes them better or safer drivers.........
Find something that shows this is true. You won't... as it can't be shown. What you _will_ find is that people with lower credit scores tend to file more claims. These are two different things.
I don't think I could find some data showing it's true that people that are financially irresponsible (not talking about hard times here...let me be clear), are also less responsible in other areas of their lives...I'm just talking about personal experience...and in no way do i think this should affect the way they are rated...or their rate class.....
Tcope are you saying that it is TRUE that people with lower credit scores do indeed have more claims? Is that right? Like a 16 yr old boys have more accidents that is a fact, and therefore they are charged a higher premium...is that true and what you are saying, that people with low credit scores have more claims? If so what is the basis of this? (not arguing or doubting, I'm just surprised is all)....I don't buy the they handle the lower cost claims (with better ratings) because more times than not the deductible will apply and this makes no sense to me....
It seems to me (these days) that a good credit score is the exception rather than the rule...probably has to do with lack of financial education, giving credit card offers to every kid that turns eighteen even without a job, and the buy now pay later mentality....What I'm asking/saying is what (I wonder) is the percentage of the adult population 30% 50% with poor credit scores...If so...wow-wee!
I'm quite surprised and enlightened by this, clearly I don't/haven't paid much attention to ratings etc.
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This is directly related to the loss and not used as a basis for determining risk.
you're right.......
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Its like the banks charging a 35 dollar fee for a 2.00 debit with insufficient funds.
This always made me shake my head too...if a guy writes a bad check...then they charge him an additional 35-50bucks for that (maybe 2.00 check)....wth? where do they think that will come from? I think though should a person not immediately (lets say within 72 hrs) cover their check something should happen...we can't have people going around writing bad insufficent fund checks....because the thrickle down could be huge.... _________________ Have you been helped by a poster? Do you want to show your appreciation? YOU CAN !! Just simply click on the donate button and send them some coin!
I don't think that all people with low scores should be punished like this, what if something happened that was out of your control, like you got very ill and could not work or had a sick child and could not work or something else unfortunate happen in your life where no matter how hard you tried, you could not help but falling behind. Credit card companies are not very friendly when it comes to these situations and they will turn you into collections in a heart beat, there fore screwing up your credit and then later it affects your car insurance, there should be a fairer way to handle rating insurance, I don't agree with it at all. Is there a place where you can find out if your state is one of the state that do this practice?
Is there a place where you can find out if your state is one of the state that do this practice?
your states DOI site should tell you .... all the ones i've ever looked at address it...... _________________ Have you been helped by a poster? Do you want to show your appreciation? YOU CAN !! Just simply click on the donate button and send them some coin!
What is a DOI? I agree with goodnatured. It makes insurance companies and banks and creditors in general look greedy and unfeeling. Bad things happen to people with the best intentions and you can see that by the amount of forclusures.People like that don't care and they can't afford to care really if they helpo one person you have to help them all. I hate it. There has got to be another way for low income familys to get a break i agree. Our electric alone is nearly 300.
