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Did you pay all your bills this month? Your insurance company wants to know. Credit scoring, the term used by insurance companies to rate your credit, has been a disaster for some consumers. Most insurance companies are now basing the cost of your insurance policy on your credit score. Missing as little as two payments on credit cards or other financial obligations could lead to your insurance premium possibly doubling. If your credit is bad you could pay more regardless of the time you have been with your insurance company or your loss history.
Many are asking, "What does one's credit rating have to do with their insurance premium?" The answer may surprise you. Insurance companies feel that if you are not responsible with your money, then you are more than likely not going to be responsible on the road. According to his recent statement to CBS, Donald Hanson of the National Association of Independent Insurers agrees. Hanson stated, "Research indicates that people who manage their personal finances responsibly tend to manage other important aspects of their life with that same level of responsibility and that would include being responsible behind the wheel of their car or being responsible in maintaining their home." Some disagree with Hanson's ideas on insurance credit scoring and feel it creates a hardship for many who are already struggling.
Critics feel credit scoring is unfair and hurts only the working class. A great deal of consumers that have bad credit are blue collar workers. Opponents argue that the low economy has put a strain on the large amount of working class in America. While struggling to pay for basic necessities they may miss a few payments, which in turn could make their insurance premium skyrocket. In many areas public transportation is not readily available and insurance is a necessity. Also, in the case of many Americans who have no health insurance, a medical emergency could be even more devastating when one is having a hard time paying the medical bills and then come to find that their insurance premium has been raised tremendously because of a few missed medical payments. Opponents feel the new credit scoring by insurance companies just makes the working class fall even further behind.
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