Auto Insurance El Paso Texas TX

Reader’s Question:

I am quite puzzled why my credit standing would determine my auto insurance premium rates in El Paso, Texas. Is there enough correlation to my spending and auto insurance premium rates?

Hans

El Paso, TX

It was not like this when auto insurance started selling on the market. You can blame that on the credit scoring company Fair Isaac & Co. (better known as FICO) who just wanted to drum up more business and tied up with auto insurance companies in the early nineties.

Apparently, FICO approached car insurance companies about using credit scores to determine their customers’ premiums. Many car insurance companies took FICO up on its offer at that time and FICO was able to show a correlation between certain credit behaviors and increased insurance risk. Auto insurance scoring proponents yielded studies which showed that having bad credit makes someone more likely to engage in risky behavior which also indicates a greater probability of outright fraud.

I quite get that but what’s really fraudulent is the secretive nature of credit and insurance scoring. Do you know that 2/3 of consumers did not know that their credit was a factor in their car insurance rates? It is good that you know this for most auto insurance policy owners in El Paso, Texas would not. Only very few car insurance companies share this information with customers and none of them will ever detail their scoring methods, not even in Texas TX.

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