What is the difference between an insurance score and a credit score and how are they calculated?
While insurance scores predict insurance losses, credit scores predict credit delinquency. Both are calculated from information in a credit report, such as outstanding debt, bankruptcies, length of credit history, collections, new applications for credit, number of credit accounts in use, and timeliness of debt repayment. Insurers or scoring agencies then calculate the insurance or credit score by taking the information in the credit report and assigning positive weights to the favorable information and negative weights to the unfavorable information. Information such as income, ethnic group, age, gender, disability, religion, address, marital status, and nationality are not considered when calculating an insurance score.
