How Your Credit Affects Your Insurance Rates in Ohio

You might not think your credit has anything to do with your car or home insurance. But in Ohio and most other states, it can affect what you pay.

Do insurance companies check your credit?

Many do. The National Association of Insurance Commissioners (NAIC) says FICO estimates about 95% of auto insurers and 85% of homeowners insurers use credit-based insurance scores in states where it’s allowed.

Ohio allows it, with rules. Ohio’s rule on credit in insurance covers personal auto, homeowners, renters, mobile home, dwelling fire and personal umbrella policies.

An insurance score is not your regular credit score

This is where a lot of people get confused. A regular credit score predicts whether you’ll pay back a loan. A credit-based insurance score uses information from your credit report to predict how likely you are to file an insurance claim. NAIC says insurance scores may weigh things differently than a lending score does.

So there isn’t one magic number, like 700, that every insurance company uses. Each company uses its own model.

How much does credit affect your rate?

It depends on the company. NAIC says insurers may group people by risk and then move premiums up or down based on that group. Credit is one factor among many. Others include your driving record, claims history, where you live, your home or car, and the limits and deductible you pick.

That’s also why shopping can help. Two companies can look at the same credit history and price it differently.

Your rights in Ohio

Ohio’s rule (Ohio Administrative Code 3901-1-55) sets limits on how insurance companies use credit for personal policies:

• They have to tell you. You must be told when you apply that your credit may be checked and used.
• Credit can’t be the only reason. An insurer can’t use credit alone to turn you down, set your total premium or raise your rate. Other factors have to be considered too.
• Some things can’t count against you:
• credit checks you didn’t start
• credit checks for insurance quotes
• medical collections
• info you’re disputing with the credit bureau while it’s under investigation
• more than one mortgage or auto loan check within 30 days, which get counted as one
• You get a written notice. If credit leads to a higher rate or other adverse action, the insurer has to tell you in writing within 30 days. The notice has to name the main credit reasons and the credit bureau it used.
• Errors get fixed. If the credit bureau finds your info was wrong and the insurer is told, the insurer has 30 days to re-rate you. If you overpaid, you get a refund for up to the last 12 months or the current policy term, whichever is shorter.
• You can ask for a recheck. Once a year, you can ask your insurer in writing to recheck your credit. They can wait until your renewal to do it.

What you can do

• Check your credit reports. Look for mistakes and dispute them with the credit bureau. You can get free reports at AnnualCreditReport.com.
• Pay bills on time and keep balances low. These help your credit over time.
• Ask for a recheck. If your credit has gotten better, ask your insurer in writing to recheck it, as Ohio’s rule allows once a year.
• Shop your policy. Since each company weighs credit differently, comparing companies can make a difference.

The bottom line

Credit is one of many things insurance companies may look at. Ohio has rules to keep it fair, and you have the right to ask questions and fix mistakes.

Want to see how your rate compares? Call or text us at 330-486-8404. We work with multiple top-rated carriers, and we’ll try to save you money.

Kaufman Insurance Group is an Ohio-based independent agency with agency licenses in Ohio and North Carolina. Contact us to shop multiple top carriers.

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FAQs

Does my credit affect my car insurance in Ohio?

It can. Ohio lets insurance companies use credit-based insurance scores for personal auto and home policies, but credit can’t be the only factor.

Is an insurance score the same as my credit score?

No. A credit score predicts loan repayment. An insurance score uses credit information to predict insurance claims.

What is a good credit score for insurance?

There isn’t one number every company uses. Each insurance company uses its own scoring model.

Does getting an insurance quote hurt my credit?

In Ohio, credit checks related to insurance coverage can’t be used against you in an insurer’s credit scoring.

Can I ask my insurance company to check my credit again?

Yes. In Ohio, you can ask in writing once every 12 months. The insurer may wait until your renewal.

Sources

• National Association of Insurance Commissioners, “Credit-Based Insurance Scores”
• Ohio Administrative Code 3901-1-55, “Use of credit history and credit scores”