Fortunately, or unfortunately for some insureds, an insurer is fully compliant to ask you for the right to access your credit score in order to offer you an insurance premium that reflects your current financial status.
Is it legal?
Yes, if you live in the province of Quebec. However, insurers in Ontario cannot use the credit score for a car insurance policy but can use it for home insurance. In other provinces, this practice is not permitted, as is the case in some Maritime Provinces.
Is it mandatory to give access to my file a credit?
No, and if you want to do it, insurance companies must get your consent, either electronically or verbally! On the other hand, you will not be entitled to the discounts offered and it may be that your insurer is obliged to charge you an extra charge because he does not know your credit score.
Insurers cannot refuse to offer you a premium even if you do not give them access to your credit score. Your premium will simply be higher. Insurers must offer a premium that represents the risk of the insured.
It can be very worthwhile for you to give your credit score verification consent to insurers since the majority of consumers who have accepted have obtained a better insurance premium, according to the Autorité des marchés financiers (AMF). The Automobile Insurance Rating Report (2007, p.23) states that the use of an individual’s credit rating may offer a 15% discount for a car insurance premium and can go up to 30% in general.
Is this the only information used by insurers to offer a price for an insurance premium?
No! There is also :
1- The profile of the individual (sex, age, place of residence)
2- The type of vehicle and the purpose of its use
3- The claim file of the individual
Is there a link between an individual’s credit score and the insurance claim risk?
Yes! People with lower credit scores make twice as many claims as those with better scores, according to a study by the US Federal Trade Commission. Insurers have also demonstrated that an individual with a low credit rating is strongly linked to the possibility of a claim. It is obvious that this method is not the fairest, since it disadvantages some people and will benefit others, says Geneviève Grenier, Option consommateurs.
That’s why we advise you to consult each year your credit rating with these two possible companies. These are credit reporting agencies:
Who gives Equifax or TransUnion information to your credit report?
Your financial institutions are responsible for disclosing your financial information!
Do I automatically have a bad rating if my income is low?
No! If the consumer takes care of making payments, his low income will not affect his rating. The opposite can be. If a wealthy person does not make the payments on time , he or she will be more likely to get a low credit score.
Does every credit score request decrease my rating?
Yes and no! No, if you apply for non-credit, for example for home or auto insurance, but yes if you make a different request.
6 simple steps to get out of debt
If you need to restore your credit history, here is some useful information from the Government of Canada.
Here are the steps to take to get a better score on your credit report:
1- Prepare a budget
2- Examine your background
3- Develop a plan
4- Control and act
5- Get more for your money
Please read each step carefully through the site above, to help you further.
For any questions, you can contact the Insurance Bureau of Canada Here is a document concerning the Code of Conduct on the Use of Credit Information by Insurers created by the Insurance Bureau of Canada. This document aims to explain the purpose of this code, its usefulness, its consent and the protection of the confidentiality of information. Visit their website for more information.