car insurance-credit history

[ladreamer75]

Can a car insurance company deny you insurance in Texas if you have bad or not good credit history. Don't all drivers with good and bad credit need insurance.

[GMan26]

Yes they can deny you based on your CREDIT SCORE. They do not actually look at your credit report - just the score. Were you denied?

If so try another insurance carrier - you might be put in a "high risk pool" and have to pay a high yearly premium. Some insurance companies don't really use the score so...

[ladreamer75]

Well, They Sent A Letter To My House Saying That Due To My Credit They Could Not Accept My Business, But The Guy Still Called Me On The Phone And Gave Me A Quote Before I Got The Actual Letter. Therefore, I Was Curious As To If They Could Actually Deny Me Due To My Credit. However, I Pay My Insurance And Rent First Out Of My Check And Recently I Have Had To Take In 2 Additional Kids(there Mom Was Neglecting Them) And I Am Supporting 5 People...3 In Which Are In Diapers And One On Formula, And Thus My Credit Card Payments Became Behind Recently. Thanks For The Info.

[ngcsubutterbar]

my actual credit score got screwed over by the credit agencies. They wouldn't tell me who was trying to collect '3' yes '3' dollars from me for nearly 3 years. They (the company collecting) finally sent something to me about it and it was taken care of that day.

[Island_Girl]

Well, They Sent A Letter To My House Saying That Due To My Credit They Could Not Accept My Business, But The Guy Still Called Me On The Phone And Gave Me A Quote Before I Got The Actual Letter. Therefore, I Was Curious As To If They Could Actually Deny Me Due To My Credit. However, I Pay My Insurance And Rent First Out Of My Check And Recently I Have Had To Take In 2 Additional Kids(there Mom Was Neglecting Them) And I Am Supporting 5 People...3 In Which Are In Diapers And One On Formula, And Thus My Credit Card Payments Became Behind Recently. Thanks For The Info.

LAdreamer, did you shift to capitalize every single word????? OMG, you are so good!!! Holy COW!!! That's awesome!




Heehee! Sorry, I'm easily amused. As you were.....

[EX_529]

I know they look at your credit history as well as the score to determine whether or not a given company is going to underwrite coverage on your vehicle. Insurance companies employ the brighest statisticians and acuaries and have determined a direct correlation towards credit and accident histories. It has a lot to do with personal responsibility. While not full proof, it has been pretty useful in eliminating people with a probable high disposition to having accidents.

Insurance companies also look at profession and where you work as well. If you travel a lot, even if you don't drive your personal car, the probability of having an accident increases.

[Scoop]

Well, They Sent A Letter To My House Saying That Due To My Credit They Could Not Accept My Business, But The Guy Still Called Me On The Phone And Gave Me A Quote Before I Got The Actual Letter. Therefore, I Was Curious As To If They Could Actually Deny Me Due To My Credit.

When you initiate (buy) an insurance policy, what you initially receive is a binder. In all reality, it's an application for insurance coverage. The insurance company is, in essence, providing insurance on the basis of the information you provide on your application (binder).

If it turns out that your information was not accurate (e.g., you really had FOUR at-fault accidents instead of the ONE that you told them about) or OTHER reasons for denial come up while they do the background check, your insurance coverage is cancelled.

The vast majority of auto insurers now use credit risk scoring as a basis for determining insurance premiums and/or, as in your case, a factor in whether or not they will insure you at all.

A few years back, the auto insurance industry decided to buy into the credit reporting industry's bull**** theory that a person's credit risk is somehow related to whether or not he/she will file an insurance claim. According to the experts, if you have a difficult time paying your bills on time (thus, resulting in a low credit risk score), you are at a greater expectancy to file a loss claim, compared to someone with a good credit risk score.

Frankly, they've done nothing more than substitute correlation for causation. Using their theory, one could determine that people with certain hair color were more susceptible to filing insurance claims than people of other hair color, thus charging higher premiums for some people based soley on a factor that bears no REAL relationship with a perceived outcome.

In short, it's a joke. But those in the industry who have a boatload of money and a busload of lobbyists seem to get their way. And the little man is the one left footing the bills.

Order your credit reports. There are three primary credit reporting agencies:

Experian www.experian.com
Equifax www.equifax.com
Trans Union www.transunion.com

You can even order them online and receive them instantly, including a simulated "credit risk score" (not the REAL FICO, Beacon and Emperica scores that the lenders use, but a semi-close version).

You DON'T need the monthly credit monitoring service or any of that crap. Just get the standard credit report with risk score (about $12 each). I don't like the "all-in-one" reports; I like seeing my credit history from the company that has the data, not someone who uses the data to create some fake score and summarized report.

Once you have them in your hands, you can see what the lenders (and insurers) are seeing, and what you need to address in order to help your cause.

Feel free to PM me if you'd like further assistance or info.

[Scoop]

I know they look at your credit history as well as the score to determine whether or not a given company is going to underwrite coverage on your vehicle. Insurance companies employ the brighest statisticians and acuaries and have determined a direct correlation towards credit and accident histories. It has a lot to do with personal responsibility. While not full proof, it has been pretty useful in eliminating people with a probable high disposition to having accidents.

Insurance companies also look at profession and where you work as well. If you travel a lot, even if you don't drive your personal car, the probability of having an accident increases.

They don't look at the actual content of your credit history. Their litmus test for premiums and coverage (at all) is your credit risk score.

It's not the insurance companies that employ the statisticians and actuaries that create the risk models used to aggregate a risk score -- it's the credit reporting agencies (Experian, Equifax, Trans Union). The fact of the matter is -- the credit reporting industry gave birth to this horrendous pile of crap (the correlation between risk score and potential for filing a claim) and the CONVINCED the auto industry that THEY NEEDED THIS PRODUCT!

As I explained in a previous post, one could draw a parallel between automotive insurance claims and the color of a person's hair. By crunching the numbers, one could prove this correlation. Would that justify higher insurance premiums for people with a certain color hair? No, not at all.

Think about this situation:

Family A: Mr. and Mrs. Ritzy live in a posh little neighborhood, complete with every amenity imaginable. Mr. Ritzy is a lawyer pulling in $350K a year. However, Mrs. Ritzy is a callus, ***** of a driver who routinely causes accidents and/or files claims for auto repairs. However, since their money pays all their bills on time, they have an excellent credit risk score.

Family B: Ms. Single-Parent works in a factory that pays $6.50 an hour (no benefits). She's busy raising two children on her own, because the former husband was banging the babysitter and they took off to Mexico together, leaving Ms. Single-Parent with a stack of bills and little income. Because of this, Ms. SP has a difficult time keeping things afloat financially -- and is late on her credit card and auto loan payments once in a while. However, she's got the cleanest driving record you've ever seen, without even a single civil infraction.

Based on the above, Family A gets a GREAT rate (low premium) from Allstate, while Family B is either denied coverage or is quoted some outrageously high premium.

So is credit risk an accurate contributor/indicator to use in order to determine auto insurance premiums? I think not.

[ladreamer75]

I would like to thank all of you for the comments and suggestions for getting the credit reports and for all other information you provided me. Right now I have decided to stay on my moms insurance until I can get more money together some way or another to get a policy of my own. (Island_Girl, I didn't intend to capitalize all of my words...some how when I entered it all in it did it by itself...I thought it was cool too! ) So thanks everyone