Otto Larson, Vice President & Partner
Insurers in certain states use a credit-based insurance score (CBIS) to approve or deny auto insurance policy applications, renew existing policies and set rates for customers. In an interview with Fox Business – Money, Partner Otto Larson explained how credit-based insurance scores are used to set rates and why your score is not the only factor that impacts how much you pay.
“The idea is that a person with better credit is essentially more financially responsible, and that may be correlated to safer driving and fewer insurance claims,” said Otto.
While credit-based insurance scores may be weighed heavily by some companies, they may be less of a factor elsewhere.
“Each company has its own pricing model,” Otto added. “Credit is not the sole factor. There are more variables that go into car insurance pricing.”
When insurance companies review credit, this is considered a “soft” inquiry. Otto noted that people shouldn’t have to worry about that hurting their score.