You may have heard that most insurance companies, including GEICO, use credit information in most states as a small piece of the giant puzzle in determining insurance premiums. Whether you’re just curious about the practice or just got a heads up, we think it’s essential for you to have all the information.
By the way, GEICO only uses credit information in states permitted by law.
First things first: your credit score will not be affected.
Credit-Based Insurance Scores (described in detail below) take into account information from your credit report. The first thing to know is that if GEICO obtains a credit-based insurance score as part of calculating your insurance quote, the inquiry is labeled as coming from the insurance company.
Insurance-related inquiries are NOT considered toward your credit score. If you get your credit report from one (or more) of the major bureaus, you’ll be able to see the inquiry, but it will never lower your score or affect your ability to get credit.
What does credit have to do with insurance? Isn’tIsn’t my driving record more critical?
Insurance premiums are based on a wide variety of factors, such as the type of vehicle, how the car is used, the driving history of all drivers listed on the policy, and claim history. Studies have shown that credit-based insurance scores correlate strongly with the likelihood of filing a claim. When these scores are combined with other insurance factors, insurance companies can better determine an accurate personal rate based on anticipated risk.
According to a Conning and Co. survey, more than 92% of major insurers, including GEICO, use credit-based insurance scores to help determine insurance premiums in most states. In many cases, this information helps reduce the cost of insurance.
What is a credit-based insurance score?
Before answering this question, it’s important to note that you will never be denied a GEICO policy solely based on your credit-based insurance score.
Like your credit score (the three-digit number used by financial institutions to determine credit eligibility), a credit-based insurance score is a numerical summary of the information in your credit report. However, credit-based insurance scores don’t consider the amount of credit you have or other income indicators. These scores only consider information that has shown a correlation in predicting possible future claims losses. This information may include payment history, collections, length of credit history, and credit utilization.
My credit score is very high. Why wouldn’t I get the best rate?
Your financial credit score is not the same as your credit-based insurance score. Additionally, your credit-based insurance score is used along with many other factors to determine your rate.
What if my credit report is wrong? Can you tell me what’s on my credit report?
If there is an error on your credit report, contact the credit reporting agency directly and report any discrepancies. Once your records are corrected, contact us, and we’ll be happy to re-evaluate your quote.
If your GEICO quote were negatively affected by your credit-based insurance score, we would share with you the name and address of the consumer agency that provided us with the information that was used to help determine your rate. We will include contact information for the credit reporting agency so you can contact them to obtain a copy of your full credit report. Our sales and service agents do not have access to your credit information to protect your privacy.
If you want to review your credit report, you are entitled to one free report each year from each of the three major credit bureaus: Experian, Equifax, and TransUnion. To better understand your credit, you should review the reports from all three bureaus annually.
What can I do to improve my credit-based insurance score?
Things like the length of your credit history can only change over time; however, you can always work to improve your overall credit-based insurance score and your credit score by paying your bills on time and maintaining a low balance on your credit cards.
But remember: a credit-based insurance score is just one of many factors used to determine insurance premiums. Like driving safely and responsibly, other things are also vital if you’re looking for ways to lower insurance costs.
Do I have any rights if my credit history affects my rate or eligibility for insurance?
Of course. If GEICO has taken adverse action against you (such as offering you a higher rate) due to information in your credit report, you can get a free copy of your credit report. If you think there are errors on the news, you should immediately notify the credit reporting agency.
What if I have an exceptional circumstance that negatively affects my credit history?
Suppose your credit history has been affected by a rare life event, such as a medical crisis, temporary job loss, divorce, death of a spouse or household member, identity theft, military deployment abroad, or a catastrophic event. In that case, We will consider the exceptional circumstance not negatively affect your rate. We may require documentation of the particular occasion.