Determining what is a good insurance rating score is difficult because each insurance company uses different factors to predict the chance that an applicant will file a claim during the policy period. FICO, also known as personal credit score, plays a huge part in determining insurance rates.
Fair Isaac Corporation, creators of the scoring system, analyzes factors such as payment history, ratio of credit used to total credit extended, types of credit, and credit history to determine the score. A FICO score of 680 and above is considered good, while one of 700 or above means very good to excellent.
Few people have a perfect insurance score, which would mean they carry little risk of filing a claim during the insurance period. Credit ratings are large component of insurance score ratings because statistics show a correlation between poor credit ratings and insurance claims.
In addition to FICO scores, other elements used to determine vehicle or homeowners’ insurance include replacement cost, location and how comprehensive a policy is.
Nationwide Insurance Co. lists the following factors to determine insurance score for automobile policies: age, driving experience, how the vehicle is used, vehicle make and model, claims history, geographic location and credit history.
Credit reporting agencies provide insurance companies with up to four credit factors that affect score. By calling your insurance company, you should be able to discover what goes into your rating score.