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.