Credit reports, car insurance, and points for buying a car

About a week ago, I posted about a concerning disclosure included in our car insurance that indicated our rate not the best that could be offered due to credit factors. Since then, the car bug bit, we’re buying a new car, and I thought I’d share the additional information I’ve learned about how credit is affecting our insurance rate.

While putting together the last post, I’d received quotes not just from Flo but several others as well and I’d discovered that Flo’s quote leveraged my Experian credit report which is pretty heavily used for credit card churning. At the same time, I could see that my “good neighbor” also pulled Experian but the others, if they’d used a credit report, must have used another bureau.

Around the same time, I was kicking around adding a newer car for no particularly good reason except that, in the aggregate, it wouldn’t be a bad deal and I wanted to. In the course of shopping, I did lots and lots of quotes with another company. Though easy enough that a caveman could do it, their site was a little annoying since once you created a quote, you couldn’t edit it. In fact, I did so many that their site stopped letting me quote at all! Nonetheless, in the many iterations, there were a few interesting things I learned:

  • Between my initial quote 10 days ago and a new round of quotes about 5 days ago, the Gecko’s rate dropped from a rate higher than Flo’s new rate to one that was comparable to my old rate from Flo. In short, it reversed the ~26% increase I’d observed. Strange but very, very welcome. I haven’t yet contacted other companies to see if they fell too.
  • The rates didn’t vary whether I included a 4 year old incident where our car was parked nor whether I made myself or my wife the primary.
  • Since the gecko wouldn’t give me any more quotes online, I called in to get a last few small iterations. While on the call, I asked the rep whether they used a credit report and they confirmed they had and noted that I’d received over $500 in rate reductions for “financial responsibility.” The agent also said that, as best she could tell, this was the top discount I could receive in that category and laughed when I said I was only talking to them after Flo gave us less than her best rates. I probed a bit more and the agent said they use a score from Transunion. I’d like to note that their rep was far, far more knowledgeable about how credit was used than Flo’s rep and I appreciated that.

Armed with that, I took a look at CreditKarma.com which pulls from Transunion, allows for updates any time, and even includes an insurance score.

It only went back about a year (the time scale is compressed) but that line shows two odd things. First, my score’s basically went up for the last year and second, my insurability is “Fair.” I never paid much attention to this graph before since auto insurance didn’t seem affected by credit…until now. I’m kind of hurt by the “Fair” rating but whatever they call it, as long as I get their best rates, it doesn’t matter. For the same reason, I don’t care about an 800+ traditional credit score.  740 does just fine (recent refi to 15 years at 3.125% with no points as a case in point).

When the Gecko’s rates dropped last week, I assumed there was some change in my credit profile that moved me back to top-tier. The chart above contradicts it (and the update just before the latest was right after my last churn). Of course, analyzing my credit for insurance may well consist of much more than a number, just as it does for credit cards, mortgages, and so forth. Nonetheless, I’d be really happy if I could synthesize a small set of safe guidelines (e.g. keep insurance score over 800). Perhaps over time that will start to emerge.

Anyway, we pick up the new car in a week so I’ll be doing a bit more insurance shopping. It’ll be interesting to see if Flo’s (or other’s) rates drop since I’ve only done quotes with one company in the last 10 days.

I apologize if this is a bit too off-topic for a mostly-travel blog but since so much of our travel is funded by use of credit, understanding the possible indirect costs via car insurance seemed worthwhile. To tie it back a bit more, we’re buying the car in Wisconsin and will this’ll be my 3rd trip up to Milwaukee in 7 weeks. This time though, we utilize our Southwest companion pass and 11,460 Southwest points for the two of us to fly up one-way. We arrive shortly before the dealer closes so they’ve agreed to pick us up at the airport, shuttle us to the dealer to finalize the transaction, and we spend the evening in southern Wisconsin before making the drive back south. Pretty nice use of the companion pass again though I really would have preferred to use up some of our Airtran credits converted to Southwest as that would be an even better value. Too bad it was pretty short notice and the availability wasn’t there. That said, it’d have been at least 25k AA or United miles for the two of us to make it up so this is a far better value at 11,460 Southwest points. I may not be loving Southwest, yet, but the companion pass rocks.

Also, we get asked about using credit cards to buy cars once in a while. Usually that’s a tough sell to the dealer. In our case, they’ve agreed to take $3,000. Using our Amex Pre-paid, we’re earning 15,000 Ultimate Rewards points which is pretty fantastic (that’s more than our flight up!). I’m toying a bit with a few other ideas to increase the spend though. I think I’d have to make it in the dealers interest though. About the only way I can see that working is if I can continue to get 5x through Amex Pre-paid cards which is so profitable that there might be some room there. Anyone know how fast a 2nd and 3rd Amex Pre-paid ship since each person can have 3? That would theoretically increase my 5x capability by another $10,000. I might just be getting greedy with that though. 🙂 I’ve tried to keep that program within reasonable but still very worthwhile limits.

For what it’s worth, we’re in Chattanooga, TN this weekend. Beautiful drive in from Nashville last night and it seems like a really nice area. Enjoyed a great burger for dinner at the Tremont Tavern last night and the upgrade to the king suite at the Sheraton Read House is much appreciated since we’re both working remotely. Great redemption of 10k points for 3 nights leveraging SPG Gold status. Likely more on this trip later…

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One comment

  1. jbwiggins · · Reply

    I got the 2nd prepaid almost 3.5 weeks after ordering but we went for the $200 bank transfer $25 gift card bonus. Prob quicker if you just open and don’t load.
    FYI, you can put a creditfreez on the credit account you mentioned first and often force them to try another credit bureau – I also often call and tell them to pull from another. I did this recently on anInk card and worked perfect. For some reason NY and NJ peeps get all their credit pulls onXperian…

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