Do insurance companies run a free credit score check on consumers?

Once the customer starts a policy with an insurance company, it can check the customer’s credit history whenever it wants to with the permission of the customer. An insurance company does a free credit score check of its potential customer to determine his financial ability to make premium payments on time and the likelihood of an insurance claim.

In other words, a customer’s insurance premiums and credit scores influence what he pays to the company. However, inquiries made by lenders have a marginal impact on the individual’s credit scores.

Can an individual refuse a score scan?

A customer can refuse a credit score check anytime. Even after the refusal, the insurance companies will continue with the existing policies and will also have to renew ones that are maturing. However, these companies may not offer the customer the best premiums.

In case of an adverse action

Most customers are unaware that if an insurance company has initiated an adverse action like charging more for coverage, reducing policy coverages, or denying or cancelling the insurance, then it must provide the individual with a written notice which must include,

a. The specific reason for the adverse action

b. description of the factors that influenced the score

c. name, address and toll-free number of the credit bureau that provided the credit information

d. statement of consumer’s right to obtain a free copy of the free credit score check report

e. statement of consumer’s right to challenge information in the report

Tips to up credit score

a. Directly seek free credit score check report from the bureau and look for factual misinformation

b. Pay bills in time and the scores will gradually gain health

c. Apply for a  limited number of credit accounts

d. Good credit management will automatically reflect in the report

e. Ask the company to re-evaluate the insurance credit score at renewal

f. Look out for other insurance companies. While some companies might not use the information at all, other companies might use credit information in different ways and offer different discounts.

Good to know:

a. Ask the company for textual material explaining how credit information is used

b. Ask whether the credit information has affected the premium

c. In case of any errors in the report, be the first to inform the insurance company right away  

d. While looking around for insurance companies remember rates vary from one company to another. Take the best pick.

Having said the above, consumers must be aware of possible traps they could fall into. There are several ‘credit repair’ firms floating in the market offering removal of negative information from credit reports and a ‘quick fix’ therapy which could further upset the scores. Check out https://creditsscore.in/free-credit-score-check for further information.

We have the answer to ‘what is a good credit score?’

Wondering what is a good credit score? A good credit score is the credit level where good things begin to happen and a respectable credit score reflects is marked by good credit management. People with good credit scores are marked as ‘felicitous’ and ‘stable’ by the lenders and the insurance companies see them as people with lower risk compared to those in poor credit risk categories.

However, a perfect credit score doesn’t happen so easily- especially if you are just starting to build credit. Remember, the small amount of efforts you put in now pays off later.

Credit bureaus have split credit scores into five parts. We help you understand what will get you more perks, maximise your rewards, and beat the credit card companies at their own game. Check out the basics of ‘what is a good credit score?’

• 300-579 – Very Poor. Anything in this range and all bets are off. These are significantly below the average credit scores. Lenders do not prefer to do business with such borrowers. They are denied loans and not allowed to open new cards.

Tip: Pay bills on time and avoid high credit utilisation.

Caution: If bankruptcies or other public records are placed on the credit report, they are bound to hurt the credit score severely.

• 580-699 – Poor. People under this score board are considered ‘sub-prime borrowers’. Such credit score holders have suffered major financial eventualities like foreclosures, bankruptcies, etc., on their credit reports. They could be required to pay high interest rates. 

Tip: Work steadily to improve and build up better scores.

Caution: Recovery from these setbacks could take up to 10 years.

• 670-739 –Good. These credit score holders are eligible for a broad variety of credit products. However, they may not charge them the lowest-available interest rates or extend their most selective product offers.

Tip: Increase the odds of approval at more affordable lending terms.

Caution: Stay clear of behaviours that can lower credit score.

• 740-799 –Very Good. These consumers qualify for better interest rates and product offers. The scores signify a proven track record of timely bill payment and good credit management.

Tip: Be mindful of avoiding behaviours that can lower your credit score.

Caution: Guarding against identity thieves and those eager to hijack the hard-earned credit history is vital.

• 800-850 – Exceptionally Good.  These score will have no impact on interest rate. The consumers are likely to receive easy approvals when applying for new credit and offered the lowest rates available.

Tip: Practice additional care to maintain the score.

Caution: Such consumers are more vulnerable to cyber criminal activities. 

This write-up is an attempt to satiate queries about ‘what is a good credit score?’ Log on to https://creditsscore.in for more information.