If you’ve just bought a new car, or you’re renewing your insurance for the first time, and you’re wondering if your credit score matters, this guide will clear up all your doubts.
The government of Ontario takes the privacy of credit card history very seriously. They hold the view that any attempt to access this information would be a breach of Ontario’s Finance policy. Consequently, all car insurance providers in Ontario have received strict instructions not to determine premiums based on an individual’s credit history or credit score.
However, if you are purchasing home insurance coverage, it’s important to remember that insurance companies may check your credit score, but this is only applicable to home insurance. There has been an ongoing debate in Ontario about banning the policy of credit score checking. Still, for specific reasons, it’s difficult for insurance companies to stop this practice immediately as it could pose challenges in terms of coverage.
Credit score range count in Insurance Premium
In Canada, credit scores typically range from 300 to 900. If you fall between 660 and 724, that’s considered a good score. A score of 725 to 759 is also perfect. However, if your score drops below 660, it could be seen as poor, and you might have difficulty proving that you are responsible with credit. This score is used in both home and car insurance coverage. However, it’s important to note that in Ontario, car insurance companies are not allowed to use your credit score to calculate your car insurance premium. For home insurance, companies may check your credit score.
Why do Insurance companies ask for Credit Scores?
Insurance companies benefit from your credit history as it allows them to gauge your financial situation quickly. This means that if you have a good credit score, pay your bills on time, and have no financial difficulties; providers believe that you will also keep your car and home in good condition because you are mindful of your finances.
People with a poor credit history and score might find it challenging to convince insurance companies that they will keep their car and home in good condition and won’t cause any extra issues. This is because their credit score suggests that they are not managing their financial responsibilities well, which could lead to higher insurance rates.
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Credit Score in Home Insurance
When it comes to home insurance, as a customer, you need to be aware of your credit information. This includes your credit history, payment history, remaining debt, and bill payments. This information helps insurance companies understand your financial situation. However, remember that an insurance provider can only check your credit score if you permit them.
However, the Insurance Bureau of Canada (IBC) has strictly instructed insurance providers not to look into the credit scores of members who are buying car insurance coverage. Moreover, an insurance provider can only check a customer’s credit score if the customer permits them to do so. If the customer disagrees, the provider cannot cancel the coverage just because of a bad credit score.
Tips for not showing your credit history or score
While checking your credit score might only sometimes be necessary, if your case is a bit complicated, insurance companies might look at your credit score. Here are some things you should keep in good standing so that companies might agree to provide coverage even before checking your credit score:
For car insurance:
- No history of past accidents
- No tickets for parking, speeding, red light violations, etc.
- Good driving record
- Having a G2 or full driving license
For home insurance:
- The home is in good condition
- The home has been repaired at least once after construction
- The home is located in a safe area with no issues related to theft or weather conditions
How can I check my Credit score in Ontario?
Both Equifax and TransUnion can provide you with your credit record for a small fee. You can also obtain a hardcopy document for verification purposes, but this can only be done once a year. You’ll need to send a letter to either agency, along with photocopies of two forms of identification. Expect a response to your written request from either Equifax or TransUnion in about three weeks.
Frequently Asked Questions:
Well, it’s a good idea to keep an eye on your credit score every year. Also, make sure to check it a few months before you apply for insurance. This way, you can sort out any issues that might pop up.
The answer is yes, it can. If your credit score isn’t great, you might pay more for your insurance.
Not at all. Your insurance premiums are calculated using a mix of factors. These include your credit score, your driving history, and the kind of coverage you need.
Insurance brokers have access to a wide range of providers. They use this to help people with poor credit. They find the right coverage by pairing them with insurers who are willing to work with their specific situation.
Arjun Mano is the driving force behind the Ontario Insurance Hub. With a deep-rooted passion for insurance and finance and over 15 years of experience in the field, Arjun brings a wealth of knowledge to his role as an Insurance Expert and Finance and Insurance Content Writer.
