What is credit-based insurance scoring?
Credit-based insurance scoring is a practice where insurers consider a customer's credit information, along with several other rating factors, in calculating the cost of your insurance policy.
We access this information through reports from TransUnion, a credit reporting agency that obtains information from sources such as banks.
Credit‐based insurance scores are not used in the same way as traditional credit scores. While traditional credit scores are used to predict the likelihood that a consumer will default on a loan, credit-based insurance scores are used specifically for insurance purposes to predict the likelihood that an individual will file an insurance claim.
Why does Coachman Insurance want this information?
Coachman Insurance is asking to obtain your credit score to provide you with a possible discount on your home insurance.
Why use credit-based insurance scores in the calculation of insurance premiums?
We want to offer you the fairest, most competitive rate possible. By incorporating a credit-based insurance score into the rating model, we are better able to match the rate being charged to the risk assumed.
A person’s credit score has proven to be a strong indicator of the risk a customer will file a claim. By accessing this information, Coachman Insurance can offer customers a more accurate rate, more reflective of the risk being assumed. Lower-risk customers will have lower rates.
Your rates will NOT go up if you have an unfavourable credit score. The credit score will factor into discounts only, not to increases.
What does my credit score have to do with my insurance?
Studies show a strong relationship between credit-based insurance scores and the frequency and severity of claims. By incorporating a credit-based insurance score into the rating model, we are better able to match the rate being charged to the risk being assumed.
What factors are used to calculate my credit score?
Credit scores include a variety of credit characteristics, such as payment or credit history, outstanding debt amounts, length of credit history, type of credit in use, foreclosures and bankruptcies. They do NOT include information such as income, race, religion, gender, age, ethnic group, disability or marital status.
Will checking my credit score affect my credit rating?
No. Although all inquiries into your credit score are recorded on your personal credit report, a credit score inquiry for insurance purposes will not impact your credit score.
What happens if my credit score is not favourable or if I don't have a credit history?
Coachman Insurance will still give you an insurance quote, or renew your policy, regardless of whether you have an unfavourable credit score or no credit history. If you don't have a great credit score, you will not be penalized or surcharged. The credit score is used to determine discounts only.
Credit-based insurance scoring is just one of several factors that are used to calculate home insurance premiums. Other rating factors include:
- the age and size of your home;
- the materials used to build your home;
- the estimated cost of reconstruction;
- the location of your home;
- your claims history;
- the crime rate in your neighbourhood;
- the value of your personal belongings;
- proximity to a fire station and fire hydrant;
- whether your home is in a neighbourhood prone to sewer back up;
- the coverage and deductible you choose; and
- applicable discounts.
Does it make it harder for lower-income, younger or older customers to receive coverage?
Credit reports do not include personal characteristics such as income, race, religion, gender, age, ethnic group, disability or marital status.
How can I improve my credit score?
Following are some tips on how to improve your credit score:
- Always pay your bills on time.
- Try to pay your bills in full by the due date. If you aren't able to, pay at least the minimum amount shown on your monthly statement.
- Try to pay down your debts as quickly as possible.
- Don't go over the credit limit on your credit card. Try to keep the balance well below the limit, as the higher the balance, the more impact it has on your credit score.
- Reduce the number of credit applications you make.
- Make sure you have a credit history. Your credit score may be low because you don't have a record of owing money and paying it back. You can build a credit history by using a credit card - as long as you use it wisely.
What if I don't consent to the use of my credit score?
It is entirely your choice to allow us to access this information. If you do not want us to access your credit score, that’s OK. We will still offer you insurance. A credit-based insurance score is just one of several rating factors that are used in calculating home insurance premiums.
Will you access my credit score without my knowledge?
We will not access your credit score without your express verbal or written consent. Consent must be received from you to your insurance broker, and cannot be provided on behalf of another person. Consent will remain valid for as long as you remain a customer, or until you withdraw your consent in writing.
How often will you access my credit score?
As long as we have your consent, we will access your credit score annually, just before the renewal of your policy. Again, this will not impact your credit rating, and a customer’s rate will not increase due to an unfavourable credit score.
How is my credit score used?
Once your Coachman Insurance broker obtains your consent, the score is electronically requested from our credit score provider, TransUnion. Credit score information is then sent from TransUnion through a secure data transmission channel and is automatically applied to the calculation of your premium, along with all other rating factors.
Should I be concerned about my privacy?
We take your privacy seriously. The credit score information we obtain from TransUnion is sent through a secure data transmission channel between Coachman Insurance and TransUnion and is stored in a secure database. Your broker can’t see it, and access to this information is restricted in Coachman Insurance to a limited number of employees who need access in order to do their job. Read our full Privacy statement.
What if I have recently experienced a situation in my life that has adversely impacted my credit score?
We recognize that customers may experience exceptional circumstances that may negatively impact their credit score on a temporary basis. Identity theft, divorce, or serious illness or injury are examples of such circumstances. If you already have a Coachman Insurance policy, we are willing to review the circumstances contributing to a temporary drop in the credit score. Please ensure your broker is informed of the circumstances and is provided with any supporting documentation so that they can adequately request the review.
What if I suspect that my credit score is wrong? Can I find out what my credit score is?
TransUnion is the supplier of credit scores. You can check your credit report and score anytime by requesting it from TransUnion. You can reach them at 1-800-663-9980 or www.transunion.ca.
It’s generally considered good practice to request a copy of your credit report from a credit reporting agency at least once a year to verify that all personal information is up to date, all financial information is correct and to ensure you have not been the victim of identity theft. If TransUnion makes a material correction to your credit score based on your inquiry, inform your broker of the correction and we will re-rate your insurance premium accordingly.