All carriers to determine the premium for your personal insurance use an insurance score. The insurance score scales defer from carrier to carrier, but ultimately they are using the same information in order to determine a score. The information used to determine your insurance score is an insurance claim history report, a motor vehicle report for car insurance, and credit information.

Insurance carriers have determined that credit information is a good indicator of the likelihood of an insurance claim. Your insurance score is separate from your credit score, but it is used as a part of the information to determine your insurance premium. The more desirable your insurance score is to carriers, the more competitive they are for your business, which means lower premium.

Improving your credit score can help you save money on your premium. A few things that insurance carriers find favorable are a well-established credit history, low utilization of available credit, no late payments or collections and a good standing with open accounts. An insurance score does not affect your credit score, it is a soft credit history, and does not go on your report as a hit.