Who checks our credit ratings?

[Joan.of.the.Arch]

Oh yes, I didn't think of that. Do you get to see exactly who has checked you out, or do you only see that someone did?

[cicy33]

It isn't that people with bad credit are more likely to have accidents. It is that people with bad credit are more likely to file claims.

but I suspect folks with bad credit might also be more likely to take policies with low deductibles, putting more risk on the insurance company.

See this is where I object. I may not have good credit due to my mistakes but I don't like it when people assume or suspect just because I made some mistakes that I (being of the circle of folks with bad credit) would do something that is considered high risk for an insurance company. It used to be that your insurance premium was based upon your experience. Sure it was higher when you are young but gradually reduced as you aged. Nowadays it is more based upon the collective. While I can understand it more easily with a credit card where I am borrowing money I do not understand why it would apply when I am paying in advance for insurance. And if the payment is late or doesn't show at all they are liable for nothing. there is little risk. I am sure that there are people that file claims constantly. I am also sure that it is not just people with bad credit. sometimes people just like to have easy money. and for the record my deductibles are not high. my collision is 250 and my comp is 0. I don't see the point to high deductibles when the difference was about 5 a month cost wise.

And for the people that are suddenly shocked at the raises of interest on credit cards and the dramatic lowering of their limits even though they have done nothing wrong, you are now a part of the collective. The companies are not basing their decision on you, they are basing it on their experience with many credit card people who don't pay their bills. I also don't feel that is fair.

[Like2Plan]

Oh yes, I didn't think of that. Do you get to see exactly who has checked you out, or do you only see that someone did?

You receive notification that there was a change and you have to log onto your account to see what the change was.

[Like2Plan]

And for the people that are suddenly shocked at the raises of interest on credit cards ...... .

I believe the new CC rules prevent this. I believe it is called universal default?
What Universal Default Means and How it Affects You | SPENDonLIFE

[am_vanquish]

It used to be that your insurance premium was based upon your experience. Sure it was higher when you are young but gradually reduced as you aged. Nowadays it is more based upon the collective.

Insurance premiums have always been based on the collective (and always will be) - that's how insurance works, you're pooling your risk with a collection of other people. The key is just a matter of how the collective group you're is determined. Premiums aren't higher when you're young because you (as an individual) have no experience. The premiums are higher because the insurer's experience based on a collective group (defined as other young people) indicates more claims.

I'm a 22-year-old male and have never had an accident/ticket/claim/NOTHING, but I still pay high rates based on the collective experience of other male drivers age 20-25. Should I throw a fit because I'm being judged based on other males even though I know personally that I'm a better driver and don't pose the same risk?

Your credit score works the same way. You may know you're not the same as everyone else in the group ... but insurers can't know that based on statistical groupings. Using credit scores just re-defines the collective group you're assigned to - I guarantee you there's a mathematical, statistically significant justification for using credit scores in determining rates.

[cicy33]

Insurance premiums have always been based on the collective (and always will be) - that's how insurance works, you're pooling your risk with a collection of other people. The key is just a matter of how the collective group you're is determined. Premiums aren't higher when you're young because you (as an individual) have no experience. The premiums are higher because the insurer's experience based on a collective group (defined as other young people) indicates more claims.

I'm a 22-year-old male and have never had an accident/ticket/claim/NOTHING, but I still pay high rates based on the collective experience of other male drivers age 20-25. Should I throw a fit because I'm being judged based on other males even though I know personally that I'm a better driver and don't pose the same risk?

Your credit score works the same way. You may know you're not the same as everyone else in the group ... but insurers can't know that based on statistical groupings. Using credit scores just re-defines the collective group you're assigned to - I guarantee you there's a mathematical, statistically significant justification for using credit scores in determining rates.

Actually as I stated that you might have missed is that you pay higher premiums when you are young and generally they reduce as you age. My daughter also pays a little higher than usual. she is only 24. but it was higher when she was 19. it is gradually reducing but not much! I am not saying it is right I am saying that as we age and prove ourselves by not having multiple claims and accidents we should be based more upon on our past not based upon other people.

[cicy33]

I believe the new CC rules prevent this. I believe it is called universal default?
What Universal Default Means and How it Affects You | SPENDonLIFE

You just proved my point. Here is a copy of a section of what you just sent me to:

"Basically, universal default works like this. When the economic climate is bad, your credit card provider begins to get a little nervous. Credit card debt is a form of unsecured debt, so your credit provider knows that if your rent and your credit card payment were due at the same time—and you only had enough money to pay for one of the bills—you would probably opt to pay your rent.

In an effort to recoup some of the money they will surely lose to defaults, your credit card provider will begin to check the credit reports of their customers. They are looking for any changes (big or small) or proof that you paid one of your bills late. It could be a utility bill, a car note, department store bill, or even a gas card. As long as your payment was received 30 days late, you can be labeled a "credit risk.""

What I have been reading here is that people who posted did none of the "bad things" listed here and yet they still are seeing reductions and higher interest.
They are basing it upon the collective not on you. They are basing it on the possible bad credit of others not on you. So, again, while I understand why credit card companies do this as it is borrowed money I still do not understand why insurance companies do. They should base it upon your past history. Because the only way I am going to hurt the insurance company is if I have too many claims, (hello, they have made a TON of money off me, so if I were to do that, which I wouldn't it would have to be ALOT) and then they can dump me without so much as a raise in rates. My only point to this was insurance in the past was based as much upon your past history as anything else. Nowadays it is more based upon what people "like me" MIGHT do and therefore I will do it.

[disneysteve]

I don't like it when people assume or suspect just because I made some mistakes that I (being of the circle of folks with bad credit) would do something that is considered high risk for an insurance company.

They have reams of data behind those decisions. Insurance is all about determining risk. If their data shows that lower credit score = higher insurance risk, they're going to price their plans accordingly.

There are insurance companies that do not factor in credit scores, so you should seek out those companies when comparing prices.

[wincrasher]

There are lots of factors to show increased risk. The insuance companies have buildings full of people figuring out how to apply them.

That's why they are so profitable.

[disneysteve]

They are basing it upon the collective not on you.

Exactly. That's how all insurance works. That's what actuaries do for a living - determine risk. That's why smokers or obese people pay more for life insurance. That's why teens pay more for auto insurance. That's why dog owners pay more for home owner's insurance (if they can even get it). It doesn't mean that every smoker will die prematurely or that every teen will wreck his car or that every dog will attack visitors. The same goes for the credit thing. Actuaries have determined, based on thousands of claims data, that customers with bad credit file more claims. That doesn't mean you will, but you get stratified into a higher risk group.

[Snippa]

And for the people that are suddenly shocked at the raises of interest on credit cards and the dramatic lowering of their limits even though they have done nothing wrong, you are now a part of the collective. The companies are not basing their decision on you, they are basing it on their experience with many credit card people who don't pay their bills. I also don't feel that is fair.

As a newbie here, I had to chime in on this... it's the same thing when a utility company makes you pay an outrageous deposit because you rent your home and renters are notorious (according to them) for skipping out and leaving a bill unpaid. We just had to pay a $200 deposit because of this very thing. It's their "standard" for renters.

Dee

[Snippa]

That is what I understand, too. But some businesses keep a contract with the credit bureaus because they have reason to do frequent checks. I would not be surprised if permissions get faked on occasion and we would never know about it. I doubt if it is something that happens to many people, but I bet it does happen.

I worked for a company one time who did this, actually. They had a contract with a credit reporting agency and checked anyone they wanted to. Don't know if they had permission, but all that was needed (by them at that time) was a social security number. Though that may be different. But my guess would be that this is almost certain to happen.

Dee

[Beppington]

Funny story: A guy I know who thinks the entire world is against him & nothing is ever his fault actually said to me one time: "Look at car insurance. Say I buy a brand new Camaro, insure it, & drive it for 10 years without filing a single claim. They're not gonna give me a refund on the insurance, even though I didn't use it. Why not??"

[disneysteve]

Funny story: A guy I know who thinks the entire world is against him & nothing is ever his fault actually said to me one time: "Look at car insurance. Say I buy a brand new Camaro, insure it, & drive it for 10 years without filing a single claim. They're not gonna give me a refund on the insurance, even though I didn't use it. Why not??"

That's not such a far-fetched question actually. There is a product called return of premium life insurance. Basically, you buy term coverage and if you survive for the full term, you get your premiums back. It isn't worth doing because most people don't keep their policy for the full term and those policies cost more than standard term coverage. It is basically a marketing ploy. There is no reason they couldn't do the same thing with auto policies.

[Snodog]

Funny story: A guy I know who thinks the entire world is against him & nothing is ever his fault actually said to me one time: "Look at car insurance. Say I buy a brand new Camaro, insure it, & drive it for 10 years without filing a single claim. They're not gonna give me a refund on the insurance, even though I didn't use it. Why not??"

Some people just have the cards stacked against them.