Frequently asked insurance score questions

Studies by government insurance regulators, universities, independent auditors, and insurance companies show that a person’s credit history is a strong predictor of risk. In July 2007, the Federal Trade Commission released its study, Effects of Credit-Based Insurance Scores, that said credit histories are “predictive of the number of claims consumers file and the total cost of those claims,” and “... also may make the process of granting and pricing insurance quicker and cheaper, cost savings that may be passed on to consumers in the form of lower premiums.”

A model was developed by an analytics company that predicts the likelihood of claims, and it’s based in part on credit history. This model has been validated all over the nation and is recognized as highly accurate in predicting the likelihood of claims. Your insurance score, combined with many other factors, is calculated to determine the premium you pay. You're entitled to a written statement explaining how PEMCO uses your insurance score or claims history. To request the statement, or if you have more questions, call 1-800-GO-PEMCO or view our insurance score statement.

No. Auto and homeowners premiums are based on many factors; the insurance score is just one of those. Your auto premium is also based on things like driving record, past claims, the type of vehicle you drive, and where you live. Your homeowners premium is based on things like past claims, type of home construction, distance to fire stations and fire hydrants, whether you have smoke detectors and alarm systems, and the cost to replace your home. We will not use credit information alone to determine eligibility, nor will we refuse customers for their lack of credit history.

Information such as payment history, amounts owed, the average age of accounts listed on your report, and the number of applications for new accounts opened in the past 12 months are included in your credit-based insurance score. State insurance laws commonly limit what type of credit history information may be used to calculate credit-based insurance scores. Any prohibited factors would not be considered in calculating a credit-based insurance score, such as the number of credit inquiries made, any credit history based on collection accounts identified with medical industry codes, or the use of a particular type of credit card, charge card, or debit card.

The vast majority of auto and home insurers use credit-based insurance scores.

An inquiry is an entry on your credit report showing that someone asked to view your report. The inquiries section contains a list of everyone who accessed your credit report within the past two years, and when they received it. This also may include any company that ordered a credit score or a credit-based insurance score. Your credit report includes inquiries where you requested credit (such as a mortgage or auto loan) and when you were offered credit (such as pre-approved credit offers in the mail).

With few exceptions (usually limited to inquiries initiated by the consumer while taking out a loan), inquiries are not allowed as factors to be considered in calculating credit-based insurance scores. See www.insurancescore.com for more details.

FICO, which holds about 90% of the credit-scoring market share, says insurance inquiries do not impact credit scores. To learn more go to: www.insurancescore.com.

Under the Fair Credit Reporting Act, you have the right to dispute the accuracy or completeness of your report. You'll need a copy of your report and a confirmation code that comes with it before Equifax can talk with you in any detail about your report. If Equifax changes your report, it will send you a confirmation notice. Once you receive that confirmation, please call PEMCO Customer Service at 1-800-GO PEMCO, and we'll then reorder your insurance score. If the new score results in a lower rate, we'll change it retroactive to the beginning of your current policy term.

Equifax, a third-party vendor, provides PEMCO with a credit-based insurance score using a proprietary scoring model developed by Fair Isaac.

If you don’t receive the best rate with PEMCO because of your credit history, you have a right to receive a free copy of your consumer report from Equifax if you request it within 60 days of the notice we send about your rate. You can request your report from Equifax through its secure website. For "Reason for Credit File Request," select “Denied credit, insurance or change in credit limit.” Equifax provides your credit report along with a confirmation number you can use in communicating with them. Additionally, you’re entitled under the Fair Credit Reporting Act to a free credit report from each of the three nationwide consumer credit reporting companies – Equifax, Experian, and TransUnion – once every 12 months to confirm the accuracy of the information in your report. You can order your annual free credit report from the three credit reporting companies at the same time through a central website at http://annualcreditreport.com, or by calling toll free 1-877-322-8228, or by mailing a request via U.S. Postal Service to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.