AAA Insurance Costing Based on Credit Score

I have always taken issue with AAA credit scoring for several years, but never took any action to confront this company about my insurance rates.. although several years ago when I was about to change companies my AAA agent managed to move my wife and I to another group, in which case lowered my six month premium. However I think it is time to have the public question their pricing practices.

I can’t recall what my six month premium was in June of last year, 2018, but at the time I also had a new RV that was added to our two car policy for 2018.. in any case my wife passed away in August of 2018 so I called AAA to have her removed. Within a week I received a bill for $400.00 from AAA. I could not imagine what this was for so I called and I was informed that since they removed my wife they were using my credit score..8 hers was 9. Bare in mind this was the middle of 6 month billing cycle. This would, on a 6 month renewal, increase my cost six month cost by $800.00 to insure one person with 3 vehicles.

I asked how could my wife’s score be better than mine when she doesn’t work, all her money comes from me, and she is the one with several consumer retail cards.. I have only 2 credit cards that I have had for many years each.

In any case I wrote to Lexis/Nexis, the company that supplies the credit reports to the insurance companies and received the 60+ page report. I reviewed the report and could find nothing negative.. I called LexisNexis and spoke to an agent. We went over the report,  and specifically one page. This page contained the summary information that was important and he said that there was nothing negative contained in the report..

In the meantime I contacted Progressive online and purchased coverage for $1,017, I think it was for the same coverage AAA wanted $1,500+/-

I contacted my AAA agent to again confront him about the ridicules score and reasons. I had only 2 credit cards and never carried any balances from one month to the next. had two car loans in 2018 that were paid off.. Never ever been late ever paying my bills, loans etc..

After a couple days he called me to let me know that he talked to a main office and got my credit score changed.  The result was a new six month bill for $1,200+ . This was still roughly 20% higher than Progressive. By the way Progressive also covered car rental and AAA did not.

More information on my subsequent contact with Progressive after I received my policy in the mail.

I noticed the same 4 codes on the last page of packet regarding my credit report. I called again and talked to an agent and I explained my situation and could not understand how they could come to the conclusions.. He reply was , they only use the credit report to determine creditability and has nothing to do with the insurance coverage rates.

Now this is totally different than AAA and for that matter what has a persons credit report got to do with risk anyway beyond ability to pay bills?

I thought that DRIVING RECORD AND CLAIMS determined a persons cost of coverage.

AGAIN

What brought this subject up again since a couple months ago I thought I had this all settled, but no…. I just received my homeowners renewal and again I have the AAA Credit reporting page with the same 4 codes and a score of 8..

Prior Score 746, Current Score 752, Rating Score/Level 752/8, Score Factors 62, 53, 77, 58

Now I will respond to each code with facts:

53 Number Banks/National Revolving/Open Accounts : I had two up until November 2018 at which time I added another card at the recommendation of Experian. Just how many is too many?????

58 Relationship of Balance to High Credit on Bank/Nat or Revolving/Open Accounts: In September of 2018 I paid off the two auto loans I had. Further more I have never paid one penny in interest for carried over balances on the two credit cards or way back then I may have had a Macy’s card for a short period, but never had a carryover balance.

The highest balance on either of the two credit cards was for airline ticket that was $14,000.00 back in April of 2018, but was paid in full prior to the due date..

So why is this on the report????

 NOTE: Credit card companies should only report carried over balances not current. This brings up the Bank of America that is so stupid, if you pay you current balance early they will still debit your account for the same amount when the auto-pay is scheduled even though there is no balance due.

62 Length of Time Established: Of the two cards I had up until November 2018, the newest one was established in 2009. They got me on this one since I received a new card in November 2018 at the suggestion of Experian people.

77 Relationship of Loan Balance to Amounts: I have had no loans since September 2018 so obliviously AAA did not bother to get a current report.

The INSURANCE SCORING AND FAIR CREDIT REPORTING ACT NOTICE:

This page that begins with  “As part of our normal underwriting and rating process, we rely upon consumer credit based insurance scores to determine qualification for our lowest rates”

I just checked both my credit card suppliers and both show my score as of 25 February to be 836 and both show that it dropped 2 points since the last update. They both show an update scheduled for 4 March 2019..

My point is that AAA use of the information is obliviously being miss applied or is not understood by those that are supposed to be using it and on top of that it is nothing compared to the driving record and claims reporting.

If we take the group 60 years and older  I think you would find that a large percentage of this group has little or no mortgages have stabilized spending habits and in general by the way AAA uses the credit reports would have everyone less than the highest rating for charging insurance rates.. or applying discounts..

Myself personally have only had one claim for a deer incident back in 1996 maybe, not real sure of the year and as for my wife she had two separate incidents not of her making several years ago and another in a vehicle we were not driving about 2 years ago.

I have been with AAA for 33 years and I fail to see where I am an insurance risk in the automobile and I fail to see what my credit report has to do with my home owners insurance.   

BOTTOM LINE

I contend that AAA is misusing the credit report information to justify low ratings for customers in order to justify charging higher rates..