I remember seeing something here a long time ago that said there is a correlation between low limit credit cards and your insurance score and how it effects your insurance premium. Does anyone know the hard and fast on it? I'm sure its not in every state but it seemed to say that having low limit cards like less than $5k negatively impacted you?
I'd start here and follow the links down the rabbit hole:
https://ficoforums.myfico.com/t5/General-Credit-Topics/Insurance-scoring/m-p/6652474#M326535
CBIS is a pretty complex issue, but you are correct that some states do not allow CBISs to be used (MA for example) and certain credit lines can cause dings in the scores. More importantly some types of accounts can cause score dings; according to their data and its archaic interpretation of retail cards, the person who has a Lowe's card with a $35,000 limit and wants to save 5% on every purchase is much more likely to file an auto claim than the responsible person who uses their $500 secured card with no rewards. Credit mix is also an important factor; the person with 17 bank loans at 18.9% and 3 credit cards is a much lower risk than the person with 17 responsibly used credit cards, an auto loan and a mortgage.
@K-in-Boston wrote:I'd start here and follow the links down the rabbit hole:
https://ficoforums.myfico.com/t5/General-Credit-Topics/Insurance-scoring/m-p/6652474#M326535
CBIS is a pretty complex issue, but you are correct that some states do not allow CBISs to be used (MA for example) and certain credit lines can cause dings in the scores. More importantly some types of accounts can cause score dings; according to their data and its archaic interpretation of retail cards, the person who has a Lowe's card with a $35,000 limit and wants to save 5% on every purchase is much more likely to file an auto claim than the responsible person who uses their $500 secured card with no rewards. Credit mix is also an important factor; the person with 17 bank loans at 18.9% and 3 credit cards is a much lower risk than the person with 17 responsibly used credit cards, an auto loan and a mortgage.
Very insightful answer @K-in-Boston.
Who comes up with this stuff (rhetorical question)? If someone comes back with... it's some IT guy influencing the algorithm, I'm might just lose my S%!*, jus sayin' 
@JoeRockhead wrote:Very insightful answer @K-in-Boston.
Who comes up with this stuff (rhetorical question)? If someone comes back with... it's some IT guy influencing the algorithm, I'm might just lose my S%!*, jus sayin'
Insurance comany actuaries crunching through mountains of actuarial data to find statistical patterns that indicate risk.
Some of the things they find as factors indicating increased risk may seem nonsensical to most, and having it explained by an actuarial scientist will probably make it seem even more nonsensical, or just put you to sleep!🤣
@Thomas_Thumb wrote:
Do an internet search for "LexisNexis reason codes"
This was fascinating information. I found reason code 5260 to be highly amusing:
"Count of accounts opened in the last 60 months is 1 - 4
What information is this message derived from? The score considers the number of accounts you have opened in
the last 5 years. This includes accounts that are open/active as well as accounts that have been closed. It does not
include auto loans or leases or mortgage accounts.
How does this affect my insurance risk score? Insurance industry research shows consumers with fewer recently
established accounts experience fewer insurance losses.
What can I do to improve this aspect of my score? Having no accounts opened in the last 5 years is better."
What percentage of MyFICOers haven't opened any new accounts in the last 5 years?
If average CLs are a factor for CBIS, then effectively income while it may not be a direct scoring factor, it indirectly impacts your ability to get the best rates (given that it impacts CLs and TCLs with a given lender).
