Credit score has become the universal acceptance of a person’s reputation. For better or worse, credit scores have the power to dictate whether a person gets a car or a home. Now, a credit score can possibly weigh heavier on the receipt and details of an insurance policy.
Of course, credit scores started being used to determine risk in the early nineties. However, the risk assessment was backed by different factors. The age, gender and driving record of the individual was always considered throughout the process of determining risk.
While this process will not change drastically, the weight which each factor holds has always been a subject of debate. Driving record is important, obviously, because it is a direct link to the source of the risk. Credit scores do not reflect driving, but it does showcase culpability and responsibility of the driver. If a driver has a good credit score, the risk is mitigated, because it shows that the person is careful. Plus, it is directly linked to that specific driver. Whereas, age and gender are statistically backed. These factors are not specific to the drivers, so much as their current place in society.
Due to the different and possibly unreliable presumptions these influences could incur, credit scores have many supporting factors. Therefore, it should hold more weight than a driving statistic that is not directly related to the insured. After all, age changes and genetics create the question of bias. A credit score reflects the person’s own actions.
Yet, the argument can also be made that due to the economy, credit scores are abundantly mediocre, at best. Many people who are otherwise responsible do not have stellar credit scores. Therefore, it might not be fair to judge them based on circumstances that might be out of their control.
Nevertheless, even with a bad credit score, services will be rendered. Especially if the driver has a clean driving record, it is unlikely they will be penalized too harshly. Additionally, credit scores can be improved and that gives drivers a chance for redemption.
Therefore, when it comes to the weight of the credit score for an auto insurance policy do not fret. Increased weight means that the company is researching the true driver, instead of relying on statistics.
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