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Understanding Credit-Based Insurance Scores and Credit Scores

At O1ne Mortgage, we understand the importance of credit scores and credit-based insurance scores in determining your financial health. These scores help companies assess risk, but they serve different purposes and are used by different types of companies. If you have any mortgage-related needs, feel free to call us at 213-732-3074.

What Is a Credit-Based Insurance Score?

A credit-based insurance score predicts the likelihood that you’ll file insurance claims that cost the insurance company more than it collects in premiums. Similar to how standard credit scores can affect your borrowing rates, a credit-based insurance score could influence your insurance premiums, including auto, home, and life insurance.

Factors Influencing an Insurance Score

Credit-based insurance scores may use different factors and weighting to determine a score. Some of the factors included on your credit reports may include:

• Your payment history of your credit accounts
• Accounts in collections
• Your credit card balances and credit limits
• The age of your credit accounts
• The types of credit you use
• How much past-due debt you have
• Whether you recently applied for credit

What Is a Credit Score?

Credit scores are based on your credit reports and predict the likelihood that someone falls 90 days behind on one of their bills in the next 24 months. FICO and VantageScore® create widely used credit scoring models that lenders incorporate into their application review process.

Factors Influencing a Credit Score

Most types of credit scores range from 300 to 850, and different factors can increase or decrease your score. Generally, these scoring factors are grouped into five categories:

• Your payment history
• How you’re using credit
• How long you’ve used credit
• The types of credit you’re using
• Recent credit activity

Differences Between Credit-Based Insurance Scores and Credit Scores

While both scores consider similar underlying information, they predict different outcomes. Credit-based insurance scores predict the likelihood of filing claims that lead to a loss for the insurance company, whereas credit scores predict the likelihood of missing a bill payment. Additionally, the score ranges and the factors considered by insurers and creditors differ.

Other Factors Influencing Your Insurance Premiums

Insurance companies often consider many factors when setting your insurance premiums, such as:

• Your claim history
• Location
• The home or vehicle
• Discounts
• The types and amounts of coverage
• Your policy’s deductible

How to Improve Your Credit Scores

Improving your credit scores and credit-based insurance scores involves focusing on your credit report. Here are some tips:

• Pay your bills on time
• Pay down credit balances
• Use different types of credit
• Strategically apply for credit

Managing your credit scores effectively can lead to better financial opportunities. For any mortgage-related needs, don’t hesitate to contact O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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