Credit Scoring and Auto Insurance

I do think insurance companies should inform customers that the rate they pay is affected by their credit score. As consumers, I think we have the right to know why we are paying a particular price for a product or service. We should have all disclosures and details laid out before us in black-and-white. Insurance companies should want to disclose this information to consumers because from their standpoint it will do a lot in terms of building relationships with their customers.

If you are purchasing auto insurance you better be prepared to have information on your credit report factored into the equation. More and more you will see insurance companies using this as a criteria for determining your rate or premium. Somewhere down the line somebody determined, probably with a lot of statistics and data, that there may be a link between bad credit and the number of insurance claims, or the likelihood that a claim will be filed. It is still best to notify the customer of this fact.

If a customer feels you are giving it to them straight in terms of product knowledge, service and information as it pertains to things they offer they will be more inclined to do business with that sort of organization. No one likes surprises especially those that don’t work in their favor.

Also if an insurance company is using a credit score to help determine the premiums it will charge a customer the customer should know because it gives them a goal to shoot for in terms of increasing their credit score so that they can receive a better rate from XYZ insurance company. If there are two insurance companies and they both use the aforementioned practice to set premiums and one discloses this information and the other doesn’t , I am more likely to do business with the company that shares that information because they are being up front about the cost of their product or service.

Not only should insurance companies tell consumers how the score on their credit report is affecting the amount they pay for insurance but they should also tell them how much their premium will be reduced if their credit score improves and what the new score should be. As an added benefit they should also disclose to customers what they actually need to do to increase their credit score, such as paying creditors on time, not accumulating too much debt, avoid judgments and liens, don’t use up all of your available credit and don’t close out account which are paid off.

If you really want to attract customers then it is in your best interest to disclose as much information to them as possible and have a sincere interest in the customer. This is lacking from so many businesses today which is why those businesses don’t receive the repeat business from their customers. It’s all the little extra things that an organization does that customers look at when searching for a company to do business with and also when they are deciding whether or not to continue to do business with a particular entity.