Why do insurance companies check your credit history?

credit historyWhether you pay your bills on time or have court judgements is as much interest to your home or car insurer as someone lending you money.

Anyone applying for insurance probably does not think twice about a credit search. But you will definitely be checked by the firm before they accept an application and will price your insurance cover accordingly as well.

Your credit history confirms several details to insurers – like your name, address and date of birth.

These details not only confirm your identity, but also cross match with other insurance databases and the electoral roll to show where you have lived and when, if you have made any claims and whether you or anyone you have lived with are suspected fraudsters.

Your credit history also hints at whether you can pay for your insurance by instalments.

Viewing your credit history gives the insurer a financial track record of bill payments and a good idea of whether you can pay them in full and on time.

If you have defaults or court judgements, some insurers may turn you away. Most are likely to hike the premium.

Your credit history is personal information. Under data protection laws, the company needs your permission to trawl through your record.

If you are unsure whether you have said yes, check the terms and conditions. Somewhere in the small print is likely to be a clause that says something like by submitting this application you agree to a credit search.

Insurance company credit searches for quotes are not like searches carried out by banks and finance companies lending you money as they do not leave a footprint on your credit history.

Although the credit search will not affect your profile, it’s likely the information from your application, including some details from the search will go to the Claims and Underwriting Exchange (CUE) database, which can be queried by any subscribing company.

A list of around 90 subscribers is on the CUE web site.

For more interesting insurance articles visit My Insurance Web

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