Loans Canada Launches Free Credit Score Portal And Is Recognized As One Of Canada’s Top Growing Companies
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
When shopping around for a home, auto, or life insurance policy, you’ll be asked a series of questions about yourself, your home, or your car before obtaining a quote.
But what about your credit score? Will your insurance company also want to verify your creditworthiness before quoting you a rate for a policy?
Insurance companies use credit scores to determine your coverage and premiums charged. Your credit score is a reliable indicator of your financial health and risk in the eyes of your insurance provider. If you have a high credit score, you may benefit from better premiums with more coverage.
Your credit score paints a picture of your creditworthiness. A good score typically means that you are responsible with your finances and are more likely to make timely bill payments.
Since you’re responsible for making premium payments to keep your policy active, your insurance provider will want some form of assurance that you will pay on time. And your credit score will give them an indication of your ability to make timely payments.
Your credit score may also determine the likelihood of you filing a claim. Insurance companies make money through the premiums they charge and want to minimize the number of claims they have to pay out. Someone with a low credit score may be more likely to file a claim.
While there are other factors that insurance companies consider when determining the price they charge for a policy and the coverage provided, credit scores are still among the more important ones.
Find out what factors your credit score is based on.
If you haven’t had the chance to establish credit, then your insurance provider will not be able to use a credit score to determine your creditworthiness or financial health. Instead, they’ll have to go by any other available information about your financial position and risk level, depending on the type of insurance you’re looking to take out.
For instance, if you’re applying for auto insurance, your insurer may consider the type of car you drive, the amount of mileage you put on it each year, your driving record, and your age and gender. If you’re applying for home insurance, the insurer may want to know more about the age and condition of your home, where it’s located, the cost to rebuild, and how far it is from the nearest fire hydrant or hall, among other things.
At the end of the day, an insurance provider does not always need to check your credit score to issue you a policy. They are obligated to make an underwriting decision and use any information available to them.
Before an insurance provider can run a credit check on you, they will have to get your consent first. You can refuse to have your credit score checked if you so choose, and your insurance provider will still be obligated to provide you with a quote without it.
That said, the lack of a credit check could impact the premium you are quoted. If your credit score is high, you could get a lower price on an insurance policy, so you may be doing yourself a disservice by not allowing the insurance company to check your credit score.
In order to use your credit information, insurance companies must abide by certain rules:
In Canada, there are two main credit bureaus: Equifax and TransUnion. You can obtain a mailed copy of your credit report for free every 12 months from either one of these bureaus. Or, you can obtain a digital copy for a fee, which will give you quicker access to your credit report.
You can also check your credit score from a third-party service provider, such as Credit Karma or Borrowell.
It’s standard practice for insurance companies to request to check your credit score before determining how much to charge you for an insurance policy. A good score can result in a lower rate, and vice versa. But you don’t have to allow the insurance provider to run a credit check on you, especially if you don’t yet have any credit established. Just be aware that no credit check could impact the rate you’re quoted.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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