The Boston Globe reports Massachusetts' Attorney General Thomas F. Reilly and Boston's Mayor Thomas M. Menino have questioned whether a customer's credit history is really a good indicator of his propensity to file claims. They also charged that the use of credit information discriminates against minorities and low-income people and unfairly penalizes those who have gone through some life crisis like a job layoff or divorce."
The Conning & Co. study found most auto insurance companies now do use credit data -- if allowed by their state insurance regulator -- when underwriting new customers. Far fewer -- just 14 percent of the nation's largest insurers -- use credit data when you renew your policy. Some states don't allow insurers to use credit scores at all in insurance underwriting, and more seem to be moving in that direction.
This statement below is for the insurers who do in fact use a credit profile for insurance rates. So you telling me that the OP is going to get a better rate, when in fact they DO have a bankrupty history? LOL. Start collecting those credit cards, there is STILL a bankrupty listing on the profile for what 7-10 years? What is going to get priority? A bankrupty, or some crap $200 limit credit card that is paid 10.00 a month in dues???
And what about the morons who have 8 credit payments. (Car Loan, morgage, and credit cards) Too much open credit will also ruin your rate.
Insurance companies use many factors in determining your credit score. Here are some examples of those factors:
. Public records: bankruptcy, collections, foreclosures, liens, charge-offs, etc.
. Past payment history: the number and frequency of late payments and the days between the due date and late payment date.
. Length of credit history: the amount of time you have been in the credit system.
. Inquiries for credit: the number of times you have recently applied for new credit, including mortgage loans, utility accounts, and credit card accounts.
. Number of open lines of credit: the number of credit cards, whether you use them or not. .
Type of credit in use: major credit cards, store credit cards, finance company loans, etc.
. Unused credit: how much you owe compared to how much credit is available to you.
Two reasons to aviod all this wonderful credit card debit.
Accumulating debt can compound beyond your control. Credit cards carry interest rates. Interest, or the money you owe on your debt, compounds, or multiplies. Interest compounds quickly. Without realizing it, you can find yourself with debt that has grown out of your control.
Accumulating debt drains your ability to save and invest for your future. Every dollar that you owe toward debt is a dollar that you're not able to save and invest. The sooner you're able to begin saving and investing the more money you'll make toward your financial goals such as homeownership or retirement
