The first time I heard about the use of credit in the insurance industry, I thought, "What credit to do with it? "(Set up to Tina Turner panel number one hit in 1984," What Love Got To Do With It? ", Of course!). Well insurance consumers and fans Tina Turner similar may be surprised to learn that credit has a lot to do with it!
most people realize that financial institutions are looking a the person's credit history to determine whether to lend money or what interest rate to charge. what many people do not realize is that most insurance companies also use history credit for helping to decide to issue insurance policies or what price to pay for them. Why insurers use credit history? studies by various groups show that credit history not only predicted the ability to a person to repay a loan, but is also highly predictive of the likelihood of future insurance losses of a person.
Despite the statistical evidence, it can still be difficult to understand what the credit has to do with the future risk of loss of a person. The ability of a person to handle and manage credit has a direct correlation to the stability and responsibility of a person, which are two characteristics most insurance companies are watching closely when a review insurance application. These characteristics are inherently subjective in nature and difficult to measure. Data evaluation from a credit report can be very subjective as well. To make more objective assessment, insurers use mathematical models that weigh and score factors considered in the credit report of an applicant. The resulting score - called an insurance score -. Is then used to help insurance companies make better decisions they subscribe and rate insurance policies
Many insurance consumers may not realize the benefits of using credit that provides them. Using credit helps make insurance more affordable. Insurance companies have found that the use of credit as a factor in the underwriting process or qualification specifically allows their pricing policies. By matching more closely the price of the policy with the potential of the individual for the loss, companies are able to reduce prices for consumers.
credit, and ultimately your insurance score is just a piece of the puzzle rating and underwriting. Insurance companies consider many factors in determining a person's insurability and good price to pay to take a particular risk. To learn more about tips to save money on insurance, visit the central website.
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