Wallet Hub has released an interesting study in which they compare the auto insurance premiums between two hypothetical customers, all information is the same except that one has excellent credit whereas the other has no credit. They checked this across five insurance providers: Allstate, StateFarm, Progressive, Liberty Mutual & Geico. They also looked into how visible information relating to the use of credit scores was.
They had some interesting results:Â
- In the average state there is a 65% difference in premiums between somebody with no credit & somebody with excellent credit
- Allstate had the largest fluctuation whilst (116%) whilst State Farm had the lowest fluctuation (45%)
I’d recommend reading the full study, I was surprised by the premium difference between no and excellent credit and this further reinforces why consumer reporting agencies need to better handle inaccuracies in consumers credit reports. If you’re not familiar with how credit scoring works, I’d recommend reading our page on FICO scores (which is the most commonly used score). This information is on general FICO scores rather than industry specific scores (e.g auto insurance) but the underlying principles are the same.
