Credit Scoring and You
Have you heard of Credit scoring? Yes – awesome – what is your opinion? Feel free to share it below, i welcome a conversation about it. No? Well i think you should – because you may be in for a surprise.
According to Wikipedia, an insurance credit score is a numerical point system based on select credit report characteristics.
I am in the business and I understand this but what does it mean? It means that some insurance companies perform a “soft credit check” on you in order to determine your “risk” factor. The higher the credit score, the better the risk you are, the lower the worse.
This is a huge deal in the marketplace. According to Canadian Underwriter Magazine this is a issue left to government and that the push to have every insurer use this as standard policy when underwriter your home and auto insurance isn’t happening yet.
Okay, so what’s the big issue? Who cares if they perform a soft credit check on me – i have good credit!
The big issue is that not everyone does have good credit. We cannot fully understand why their score is like that so how can an insurer justify “amending” their insurance rates based on their score? Conversely, someone could have the best credit in the world and be the lousiest driver / homeowner, costing the insurer hundreds of thousands in claim money. Credit scoring is a tool to assist and guide rates but in this ever tightening market for home and auto insurance, it may be more of a misleading tool than helpful one.
At the moment, some insurers will perform credit checks and others won’t. Your agent/broker will know which ones are and have to ask your permission to do so (often they may not).
We no longer live in a world where we can simply assume that our best interests are protected. We have to become more and more knowledgeable about what affects us and our family and our credit rating …
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February 1st, 2012 at 4:15 pm
Hi Claudio, I was reviewing your site and found it very interesting, nice job! I wanted to ask you what comments you have for people entering the Insurance business as a second career. Some of my clients would like to know, what the industry norm pays a Part Time person, wanting to get their feet wet. As well as Full Time, like working at CCA. As for the courses, I am I correct in stating that the course is 2 weeks long full time, and you would be able to market only home,travel and car insurance. Is the life insurance license a separate exam? Appreciate your help.
Thanks,
Mr C Duchesne, CIM
BMG, Founder
March 5th, 2012 at 12:29 pm
Thank you for your compliment. I am not entirely certain what the normal pay is for this industry as it varies from office to office. I would look online or contact a recruiter for that information. The RIBO course is a 2 week course for the broker basic level 1. You are able to market home, auto, travel and business insurances but it is often wise to start with home and auto.
Life insurance is a separate course, yes.
hope this helps!