Does any one know if paying off your mortgage and carring no debt adversely changes your credit ratings? I have heard it does. I understand Geico and other insurance companies use credit ratings in assessment of insurance risk and therefore premium cost. How ironic that being more financially responsible would increase your rates. I also read that the insurers came under attack from the feds for using credit ratings in this way as a backdoor type of discrimination, as theoretically, poor and less advantaged people would have worse credit ratings....I'm not making that up.
Yes, it's true. Insurance companies now use credit as a criteria to determine your premium. Pemco uses it. I have great credit, but this method is still ridiculous.
www.choicepoint.com Get your INSURANCE SCORE (based on record and credit). This is an ATL based company that all the big boys use. Luke.
I agree using your credit score as part of the way to determine insurance rates is ridiculous. Seems to me it's just another part of the "poor pay more" program - or discrimination like stokpro said.
Maybe they figure that once your maxxed out on all your credit cards that you will all of sudden start driving fast down windy roads passing around blind corners etc... Credit can kill
This, although seemingly funny, is partially true. The consensus is financially irresponsible people, more often than not, will be prone to poor driving, or worse yet, committing insurance fraud and other scams, to bilk the insurance companies.