If your insurer wants to check your credit score, don’t panic!
In Quebec, it’s become common practice: when you’re shopping around for automobile or home insurance, most insurers will ask for permission to look at your credit score. Know that you’re free to refuse their request. But before you say no, read the following…
What is credit score, exactly?
A credit score is a number between 300 and 900 that reflects a consumer’s debt repayment behaviour. What is your payment history? Have you ever missed a payment? If so, has it happened often?
Note that insurers request access to your credit score, not a credit inquiry. This action has no impact on your credit report.
Who will insurers contact?
Insurers usually contact TransUnion or Equifax, which are two credit reporting agencies in Canada. They’re responsible for entering the information received from your creditors, including your credit use and management (bankruptcy, payment history, type of credit used, etc.), in your credit report.
Insurers don’t have access to your entire credit report, just the credit score.
Why is the insurer interested in your financial discipline?
After all, you’re only asking them to insure your property, right? Actually, your debt repayment behaviour is an extremely predictive indicator of your capacity to maintain and renovate your property. Studies have shown that when it comes to evaluating the likelihood of a customer filing claims in the future, credit information is a significant indicator.
In other words, a high credit score means a lower likelihood of you experiencing a loss—and therefore filing a claim. The opposite is also true.
Most insurers will therefore reward individuals with good credit scores by offering lower insurance premiums!
Can you refuse a credit-score check?
Insurers are required to ask for customers’ consent before checking their credit score. You should never feel obliged to grant consent in order to get a quote for a premium. You have the right to refuse. And if you do, the insurer is still required to reply to your quote request.
An insurer cannot terminate your policy on the grounds that you have not consented to having your credit score checked, and they can’t refuse to renew either. This said, you may not get the best premium.
Have doubts about the quality of your credit history?
If you believe that your file contains an error or, even worse, that you’ve been the victim of identity theft and that this could affect your credit rating, request a copy of your report as soon as possible. This way, if there are any errors (yes, it happens!) you can have them corrected. Ask to receive your credit score by mail; it’s free, unlike some online requests.
Good to know: If you’ve been the victim of identity theft, some insurers—including CAA-Quebec home insurance—offer a helpline for policyholders. This legal assistance can guide you in the actions you should take and help you rectify the situation.