Why do insurance company use credit rating to set a price on insurance i Think this is stupid?

Answers: They have found, surrounded by their studies, if you have a bad credit history, you hold a bad driving records (basically). I go with Liberty Mutual and they didn't seem to check my credit. They seem to be the best for insurance!
I have read that at hand is also a correlation between lower insurance scores and fraudulent insurance claims. Furthermore, from personal experience it also costs more of the company's "human resource" to collect insurance premiums from this class of insureds.
One's stability regarding paying debts is indicative of one's behaviour. While you might close to to jump off cliffs, maybe you secure insurance and pay your bills. Maybe you never wage your bills, crash your car yearly and don't thinking what happens.

The first is a slight risk, the second is a major risk.

DUH!
Because they are crooks, and they can. Shop around.
Well, because the raw statistics show a direct corrolation between credit score, and claims payments. The lower the credit gain, the higher the average claim is, and the more frequently a claim gets file.

It's just like contained by life insurance - women tend to pay smaller number for life insurance, because they live longer.

and auto insurance - a 16 year old boy is going to income MUCH MUCH more than a 35 year old man - because the statistics show that there are more claims.

The insurance companies don't keeping WHY there is a corrolation between claims and credit scores. It doesn't business WHY. I've never seen any studies about the WHY. I don't believe there's one out in attendance. Anyone who tells you that people near low credit scores are more careless, or don't carry on their cars as well, is GUESSING, because . . . well, not a soul knows for sure.

IT DOESN'T MATTER. Insurance commissioners in 49 states hold approved credit scoring as a heavy rating factor, because the numbers prove the corrolation. California didn't approve it, not because there's no corrolation, but because it's not politically correct. Source(s): agent, 21+ years

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