If you are not aware by now, virtually everything is now tied to your credit score. By having computers slice and dice massive amounts of data, companies can discover patterns that help them save money. Most often, these systems use multivariate analysis – a way of looking at how inputs affect an output.
Insurance companies have been on this bandwagon for a while. They look at credit related information and make judgments about your profitability as an insurance policy owner. While they may look at a FICO credit score, they’re even more impressed with insurance scores. Companies like ChoicePoint build insurance scores so that insurance companies can quickly and efficiently evaluate potential (and existing) customers.
Insurance scores, like credit scores, are top-secret. There’s no way to know exactly how insurance scores work. Nevertheless, they have a wealth of information that comes from your standard credit reports. This information is sliced and diced, and a software program spits out an insurance score.
Not all insurance scores are the same. They can come from a variety of sources, depending on who builds the software. An insurance company might have its own score that incorporates credit related information along with other data
These insurance scores are what are considered “soft” hits to your credit meaning you would have to have multiple hits to effect your scores. Best idea is not to blitz the insurance market hunting through the grasses for the best rates. Better to work with an agent or a company. Your long term relationship with one company will always out weigh the time and energy and cost of saving a couple bucks at ever renewal jumping from company to company. Most insurance carriers operate on a cycle and the pendulum of savings swings both ways.
