An insurance score is a score calculated from information on your credit report. Credit information is very predictive of future accidents or insurance claims, which is why Progressive, and most insurers, uses this information to help develop more accurate rates. Each insurer has its own method for evaluating this credit information. At Progressive, we develop our method by analyzing the following data from people we have insured:
The results of this analysis tell us what credit information will help us predict how likely you are to have a future accident or insurance claim. We assign a value to each predictive credit factor and add the values to calculate your insurance score. The lower your score with us, the better.
Are insurance scores the same as credit scores?
No. A credit score is based on your ability to repay amounts you have borrowed. An insurance score predicts the likelihood of you becoming involved in a future accident or insurance claim — it is based on information gathered from policyholders with similar credit characteristics who have had previous claims with us.
When banks and other lenders determine credit scores, they may factor in your income, job history and other matters that might affect your ability to repay a loan. Banks also can deny you a loan based on your credit score. We do not consider income or job history, and we won't deny you a policy based on your insurance score.
What credit factors can affect an insurance score?
Favorable credit information results in lower premiums. Because both above-average and below-average factors are evaluated, you still have the opportunity to get a lower rate, even if there are some below-average items in your credit history.
Favorable credit factors might include:
- Long-established credit history
- Numerous open accounts in good standing
- No late payments or past due accounts
- Low use of available credit
Unfavorable credit factors might include:
- Collection accounts
- Numerous past-due payments
- High use of available credit
- Numerous recent applications for credit
These factors vary by state to comply with the laws of each state.
How can I improve an unfavorable insurance score?
While there are some things that are out of your control — having a short credit history, for instance — you can generally improve your insurance score with us by making loan and mortgage payments on time, keeping accounts in good standing, and avoiding numerous credit applications in a short period of time.
Also, look at how much credit you have available. If you are using all or nearly all of your available credit, it could be regarded as an unfavorable factor.
FAQs
Insurance scores range between a low of 200 and a high of 997. Insurance scores of 770 or higher are favorable, and scores of 500 or below are poor. Although rare, there are a few people who have perfect insurance scores. Scores are not permanent and can be affected by different factors.
What factors determine insurance score? ›
In many cases, an applicant's insurance score is directly impacted by their credit score, although their past claims history, driving record, age, gender, and ZIP code may also play a role in determining their rates.
What is the scoring model of insurance? ›
Insurance scores, which are also referred to as credit-based insurance scores, are ratings based fully or partially on a consumer's credit information. Insurers use credit information with other factors to help underwrite and price policies.
How do I get a high insurance score? ›
While there are some things that are out of your control — having a short credit history, for instance — you can generally improve your insurance score with us by making loan and mortgage payments on time, keeping accounts in good standing, and avoiding numerous credit applications in a short period of time.
What is the 80% rule in insurance? ›
When it comes to insuring your home, the 80% rule is an important guideline to keep in mind. This rule suggests you should insure your home for at least 80% of its total replacement cost to avoid penalties for being underinsured.
How do I fix my insurance score? ›
10 Tips to Improve Your Insurance Score
- Pay bills on time.
- Keep outstanding balances at least 75% below your available credit.
- Avoid too many hits on your credit report from loan and credit card applications.
- Limit the number of credit accounts and credit cards in your name.
- Regularly review your credit report.
Similar to how creditors can use different types of credit scores, insurance companies can choose from various credit-based insurance scores. For example, FICO, TransUnion and LexisNexis all create credit-based insurance scores, and insurance companies also might develop their own scores.
What is a good credit score for car insurance? ›
With above 800 being excellent and below 579 being poor. However, it's important to note that each insurer has its own criteria for evaluating credit scores and their impact on insurance rates.
What are 5 factors that determine your insurance premium? ›
The cost of car insurance is affected by factors including your age, gender, location and marital status; the vehicle you drive; your annual mileage; your driving record; your claims history and even your credit score.
What is a good LexisNexis insurance score? ›
Here is an example of scores and rankings from the LexisNexis website: Good: 776-997.
A scoring model is a tool you use to assign a comparative value to one or more projects or tasks. Scoring models allow governance teams to rank potential projects based on criteria such as risk level, cost, and potential financial returns.
Is insurance score the same as credit score? ›
The scores predict different things.
Credit-based insurance scores predict the likelihood that someone will file claims that lead to a loss for the insurance company. Credit scores predict the likelihood that someone will miss a bill payment.
What is a bad insurance score? ›
A score of 500 or below is considered poor and could result in higher premiums or being turned down for coverage.
Do insurance companies run credit score? ›
California
Insurance companies in California don't use credit-based scores or your credit history for underwriting or rating auto policies, or setting rates for homeowners insurance. As a result, your credit won't impact your ability to get or renew a policy, or how much you pay in premiums.
What is a DPS score? ›
The Delinquency Predictor Score (DPS) estimates the chance your business will ask for legal relief from creditors, shut down without satisfying its debts in the next 12 months, or show other signs of “severe delinquency.” Your DPS can range from 101 to 670.
Is B+ a good insurance rating? ›
B++, B+ Good Assigned to companies that have, in our opinion, a good ability to meet their ongoing insurance obligations.
Is insurance score different than credit score? ›
Insurance scores are used differently from the way a credit grantor would use a credit risk score. For example, an insurance score is most often just one of many factors used in an insurer's underwriting evaluation.
Do you want a higher or lower insurance score? ›
Using the LexisNexis Risk Classifier, an insurance score of 770 or higher out of 997 is considered good and will get you a favorable premium. A score of 500 or below is considered poor and could result in higher premiums or being turned down for coverage.
