January 27, 2023
How Your Credit Score Can Score You An Insurance Discount
When visiting your insurance broker, you may be offered a credit check. No, it’s not a trick. A credit check can determine whether you qualify for insurance discounts that you might not even know you were eligible for. See? Not a trick. Your credit score can score you a big insurance discount.
Below, you’ll see more information about this opportunity and learn how you can save some money.
But first, what is a credit score?
According to TransUnion, a credit score is a summary of the information included in your credit report. Credit scoring is made up of your credit accounts, such as credit cards, mortgages, or loans, and the report is a record of how you’ve managed your credit. The collected data is calculated to create a score that helps lenders (or, in this case, insurers) make important approvals or decisions.
When it comes to credit scores, the higher the score, the better. You’re considered less likely to be a risk if your score is high. How you’ve managed your finances impacts your score. Your credit history is important, as it depicts how you take care of your accounts.
Who Qualifies for Insurance Discounts
Some places don’t do credit checks to determine insurance discounts, as rules and regulations will differ all around Canada.
Most insurers will contact TransUnion or Equifax, two major credit reporting agencies within Canada. They hold all the information about your credit use and management, such as payment history, type of credit, and more. Insurance specialists won’t be able to access your credit report, but they will have access to your credit score. You’ll need to provide consent to your insurer before they can look into your score.
Once you offer your consent, your insurer will be able to start building an insurance policy that factors in your credit score and gets you more savings. Your information will determine your eligibility and the price of your desired insurance policy.
Will My Credit Rating Be Affected?
When you hear the words “credit check,” you might be thinking of it with a negative connotation. While the general consensus is that a credit check will negatively impact your rating, you don’t have anything to worry about. Any insurance company inquiries about your credit score will not affect your credit rating. It’s a no-risk assessment.
Insurance companies look at credit scores to help them determine the likelihood of future insurance claims.
What Determines Whether You Get a Discount?
It’s not about how much money you currently have in your bank account. What matters is how you manage your finances. Whether you’re eligible to receive a solid discount on insurance policies will depend heavily on your credit score. While your insurance discount relies on your score, specific factors can impact your credit information.
Those factors include the following:
- The length of time you’ve maintained your credit rating.
- The regularity of your credit card payments.
- How many attempts you’ve made to get more credit.
- The different types of credit used.
- Whether or not you carry a balance on your credit cards and the amount outstanding.
- Records of insolvency or bankruptcy.
- Instances of debts sent to a collection agency.
If you don’t qualify for a discount on your renewal, that doesn’t mean you’ll never have the opportunity again. Try to take the time to improve your overall score and try again further down the road. You can learn more about how your credit score is calculated and how you can do better to improve it.
Remember, your insurer’s inquiry on your rating won’t hurt your score. When the time comes, check to see if your improvements worked and whether you can get in on an insurance discount.
Are you looking to score a discount on your insurance? Contact your insurance broker in Winnipeg to learn more about our rates. Whether you need personal or commercial insurance, Nation West is here to serve you.