Washington state limits how insurers can use these scores, and Commissioner Kreidler has repeatedly pushed for legislation to ban their use completely.
In Washington, insurers cannot hold the following things against you:
- The number of credit inquiries
- Collection accounts identified as medical bills
- A loan if it's the initial purchase or finance of a vehicle or home.
What goes into an insurance score? Here's the breakdown of a score from FICO, one of the biggest companies generating these scores for insurers:
• Payment History (40%) – How well you have made payments on your outstanding debt in the past
• Outstanding Debt (30%) – How much debt you currently have
• Credit History Length (15%) – How long you have had a line of credit
• Pursuit of New Credit (10%) – If you have applied for new lines of credit recently
• Credit Mix (5%) – The types of credit you have (credit card, mortgage, auto loans, etc.)
How can you improve your score? The same way you'd improve your credit score: make payments (bills, taxes, fines, etc.) on time. Keep credit card balances as low as possible. Think carefully before opening new lines of credit, such as a department store charge card, just to get a discount.
You can check your credit reports from the three nationwide consumer credit reporting companies annually at http://www.annualcreditreport.com/. If you find errors, contact the credit reporting company to have them corrected.