Your auto insurance score, also called a credit-based insurance score or an auto insurance credit score, measures how likely you are to file an insurance claim. Drivers who file fewer claims cost insurance companies less money and represent a lower insurance risk, so insurance companies use available data to determine which candidates have the lowest probability of filing a claim. To simplify that evaluation, specialized reports distill the relevant data into a number—the auto insurance score.
In other words, where credit scores rate a borrower’s creditworthiness, an auto insurance score rates an applicant’s coverage worthiness.
While your credit-based insurance score is not as widely influential as your credit score, it can still determine whether your application for car insurance will be approved as well as the car insurance rates and premiums you’ll be expected to pay. Higher scores translate to more approvals and lower insurance rates, saving you money.
Here’s everything you need to know about your auto insurance score: what it is, how it’s calculated, how to check it and how to improve it if it’s not as high as you’d like.
Auto insurance scores take eight factors into consideration:
You may recognize many of these as being determinants of your credit score. What makes your credit-based insurance score different, though, is that it also takes into account your driving record and claims history to determine your auto insurance score.
Though auto insurance scores incorporate a broad range of personal information, there are many data points that are off-limits and will never be included in your auto insurance score:
While these factors can’t be used to determine your auto insurance score, they may be considered during the insurance company’s evaluation of your insurance application.
Your score will be calculated differently depending on which provider it comes from. There are three main agencies that provide auto insurance scores: the Fair Isaac Corporation (FICO), LexisNexis and TransUnion.
Your auto insurance score is just one factor that insurance providers consider when evaluating whether or not to offer you coverage and how high your insurance premiums will be. Other factors an insurance provider may consider include:
Some states limit the information that car insurance companies can access when assessing an application. California, Hawaii and Massachusetts prohibit insurance providers from using credit scores in their approval or quotes processes.
Credit-based insurance scores vary depending on which of the three major providers the insurer chooses to use.
FICO Auto Score 9 XT
FICO draws its data from TransUnion, which is one of the three primary credit bureaus responsible for traditional credit reporting. Its auto insurance scores range from 250 – 900, and its algorithm places special emphasis on borrowing habits that matter to auto lenders, like whether you’ve increased your overall debt in recent months.
The FICO Auto Score 9 XT also places stronger weight on the individual’s past 30 months of behavior, so those with a checkered borrowing history who have made improvements in the year prior will benefit from the FICO algorithm.
LexisNexis Attract Auto Insurance Score
LexisNexis is a smaller credit reporting agency that specializes in industry-specific credit reports, including auto insurance scores. Its data is pulled from Equifax reports and its scores range from 500 to 997.
When an auto lender orders an auto insurance score from LexisNexis, the report generated can include the borrower’s full credit report or just excerpts, and it can also include an analysis from the provider.
TransUnion CreditVision Auto Score
Unlike FICO and LexisNexis, TransUnion is one of the three major credit bureaus and also happens to provide credit-based insurance scores. TransUnion’s auto scores range from 300 to 850 and are, naturally, pulled from TransUnion’s own credit data.
Like other scores, CreditVision pulls data on past payment history and borrowing behavior, offering over five years of account patterns as well as thorough details on the 30 months of history leading up to the generation of the report.
Since the three major auto insurance scorers utilize different score ranges, a good score will vary depending on which bureau is issuing it. Generally, an auto insurance score of 770 or higher indicates that a borrower is a low-risk candidate for coverage, and will typically merit the borrower higher approval ratings and lower premiums.
Unfortunately, auto insurance scores aren’t accessible for free in the way that credit reports are. However, you can order your auto insurance score from the provider of your choosing.
But while auto insurance scores aren’t free, they also aren’t nearly as important to check as credit reports are. Firstly, auto insurance scores don’t matter unless you’re planning on enrolling in or renewing an auto insurance policy. If you don’t own a car and aren’t in the market, there’s no reason to be concerned about your auto insurance score.
And secondly, even if you’re in the market for auto insurance, you don’t necessarily need to check your score directly. The factors that determine your auto insurance score overlap significantly with credit score factors, so you can often assume that if your credit score is healthy, your auto insurance score is, too.
If you do check your credit score and find out it’s lower than you’d like (or if you apply for auto insurance and don’t receive the result you’re hoping for), there are a few ways you can raise your auto insurance score.
Since auto insurance scores are less commonly discussed than credit scores and aren’t free to order like credit reports, they can seem more confusing or complicated. But by maintaining the same financially healthy habits required to improve your credit, you can be more confident that your auto insurance score will be in good shape.
If your finances aren’t as healthy as you’d like, you can figure out where to start making improvements by getting a free credit report consultation and summary of the positive and negative elements of your credit report. Getting a better perspective on the status of your credit will give you a solid foundation for making a plan to improve your finances, credit and auto insurance score, too.
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