Contining Education – Credit & Credit Scoring

April 15th, 2010 posted by: Bob

I recently attended a Continuing Ed class given by Bob Loonan, sponsored by City Auto Glass on the topic of credit and credit scoring. Minnesota insurance agents enjoyed 4 hours of gifted instruction from Bob Loonan and Dick Borg at 4 different locations. The murky world of credit, and credit scoring and how it applies to everyday people had the audience intense attention as the layers of scrutiny were peeled away as to reveal the real substance of credit scoring.

One might think, why would a collision repair web site have an owner’s article on your credit score? Fact of the matter is, if you have insurance for your home and car, your credit score plays a considerable part of your risk profile that affects the level of premium you’ll pay for coverage.

There are fierce and varying opinions of the fairness of applying credit scores to premium rates but there are other behaviors that insurers factor into your risk profile such as your driving record, accident frequency, civil and criminal history, so remember, your credit score is only be a part. It is not only the likelihood of having an accident that they’re looking at either, but the fraudulent claims, and exaggerated claims such as theft and vandalism that are proven more likely at the low credit score range.

What makes this even more interesting is that one particular company that pulls credit reports for the agent’s customers doesn’t even give that agent more than a blacked out box that tells the agent nothing! Now how in the world is the agent going to explain his product to the customer?

There are probably privacy concerns, but in this case, why bother?
Another factor that I think is as large a factor in premium cost is where you live. I’ve seen family profiles in 4 different areas of Minneapolis in the consumer checkbook survey magazine that reveal tremendous differences in cost of very similar product offerings in different neighborhoods.

One insurer’s loss experience may be quite different in the same neighborhood than another, and boy do the premiums reflect the difference.

Please just remember one thing. All of the banks, credit card companies, mortgage companies, the auto lease and finance apparatuses are throwing stuff all over people’s credit reports, and statistics reveal that there inaccurate postings on over 30% of peoples credit reports.

~ Bob Pearson

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