credit score and insurance

My Indiana Farmers agency sold business to UMI. About a year later, UMI fired all the local agents that handled my insurance. So if I want to talk to an agent, I get a call center in Cincinnati, Ohio.

That sucks. So I called Indiana Farmers directly and asked for a local agent in Terre Haute. I took all my paper work to him two days ago. Today I had a sit down with him and learned that my premiums are liked to my credit scores. A perfect score is 1. A bad score is 100. I have a 7. Agent said mine is better than his. I asked him what I have to do to get a 1. He said not to worry, rates for a 1 are the same as a 7.

Now here how you a better credit score. USE CREDIT CARDS. That gives insurance company access to your credit history. People who are cash only, will pay more for insurance, no traceable credit history.

I'm not a cash person. Pay for everything with Plastic. Plastic is auto paid from checking on date it is due. Never a late payment that way. Never had first issue with bank either. I made $300 on one card and $200 on another card just in rebates last year.

So not only do I make rebate money using plastic, I get cheaper insurance. Go figure. I did not know that did you?
geo.

Yeah, its making less and less sense to be in the "never had a credit card, never will, and proud of it" crowd. Lets look at travel without a card: Can't book a flight on any of the discount websites without a card, so you'll pay full price for your ticket at the counter (which is the most expensive ticket, bar none, and you'll have to make an earlier trip to the airport to do it)- and be sure to take enough food and drink in your carry-on, because everything on the plane is card only. And the hotel (which you also won't be able to book at a low rate in advance) may take your cash, but will want a deposit against possible damage. I don't think car rental places will even deal in cash, period. And on and on it goes.

No credit, no (or low) credit score. As Geo pointed out, insurance cost is now based on credit score by some companies. Many property management companies are making credit score a part of the background check for renters- no (or low) score, "thanks for coming by, folks, but we have nothing for you." Of course, no or low score means you can't borrow money, but that's probably not a big factor for many in that group, because they don't borrow anyhow. But you never know when disaster might strike and you may need a loan to tide you over.

I realize that some in that group want to be "off the books" on their financial dealings. Ironically, having a "conventional" financial profile (with bank accounts, credit card transactions, etc.) might just make it easier to be off the books on some transactions. Being cash only, no credit or cards, is not the "norm" anymore, and is more likely to attract the attention of the IRS than someone with a conventional financial profile who just happens to do a few things for cash, off the books. Just sayin'.

Got to tell my favorite "off the books" story before I go. A guy ("Dave"- not his real name) came to me and asked for help in getting "on the books". He was in his 60's, had never filed income tax, had never had a job, never had a bank account, and had NEVER HAD A SOCIAL SECURITY CARD! Needed to get on the books because he had a nice property which was in his mother's name- she was 85, and he needed to get it in his name before she died. He had made his living buying and selling industrial and logging equipment, always with a roll of bills in his pocket, and he was very good at it. I hooked him up with a tax attorney with some common sense in Seattle.

Attorney set up a meeting with the IRS agent. Dave asked if he should dress up- attorney said no, just wear what you have on today (flannel shirt with a few holes, logger jeans with suspenders, 3 day growth of whiskers, can of snoose in his pocket). Attorney called me after the meeting, and said it was, without a doubt, the most fun IRS negotiation he had ever had. They came in, and the agent asked Dave, "Did you bring your records?" "I don't have any records." "How can you run a business without records?" "I ran it out of my pocket. If my pocket got too full, I need to buy some more stuff to re-sell. If it got too empty, I'd better get busy and sell some stuff or Mrs. couldn't buy groceries". "Why didn't you file any taxes?" "Figured I was kind of on my own- I've never asked the government for anything, and never will- I fend for myself, and didn't see why someone else needed to have their hand in my pocket." "What are you going to do about Social Security?" "Well, nothing, I guess- I never paid anything in, so I guess I'm not entitled to get anything- but will never know for sure, because I'll never file for it." And so on. Dave never did give any estimate of the business he had done per year- "Had my mind on that pocket I talked about earlier."

In the end, with no figures to work from, the agent decided that if Dave would pay $20,000 total for the 40 years he had worked off the books, they would call it square. Attorney said Dave was about to say something, but attorney put his hand on Dave's arm, and told agent "My client and I would like to discuss this." Once in private, attorney said to Dave, "You were about to pull that roll out of your pocket and start peeling off hundreds, weren't you?" "Dam straight- I want to get this over with". "Offer's not final until the paperwork is done, and we don't want to let him know he let you off too easy. We'll accept the offer, plead poverty, get a payment program, get all the paperwork signed so they can't welch on it, then when the first payment is due, send me a cashier's check for the 20, and I'll pay it off." "I've got a better idea- (begins peeling off hundreds)- I'll just leave it with you, and you take care of it. And figure up my bill- I'll pay it now, too."

Dave was a lifelong heavy smoker, and even his end was sort of happy. Started having trouble breathing at about age 75, spent a couple days in the recliner trying to get his breath, then passed on. Wife sold the remaining inventory and the property, and moved to town with a nice nest egg in her purse.

There's a lot to be said for Dave's way of thinking. May DAVE rest in peace.. gobble

George for everyone of you that say they make money off of credit cards there are thousands who get took to the cleaners by credit cards. I have a debit card that does everything I need it to do. I have used it to travel, rent cars, and just about anything else you would want to do.

As for credit scores and insurance companies. They argue that a lower credit scores mean you will have more claims. Well they create the numbers so do you think they might just stroke them in their favor???? I go a different route. There are many insurance companies that do not use credit scores in their premium calculations. So shop around and tell the big boys to pound sand.

For the fellows that tell you that you can not LIVE without a credit score that is pure hyperbole. A credit score is just a number telling all how big a sucker you are for borrowing money and PAYING someone else for the privilege.

Credit card companies are leaches that make the money changers talked about in the bible look like angels. They suck the life blood out of the little guys on both sides, consumer and small business. Talk to some small business and fine out what the true cost of credit cards is to them.

My children do not have credit cards. They own homes and farms instead of playing money games with sharks. You run the risk of losing with a credit card company. SO why play with sharks???

I do some business like things off CL in cash but I charge all my fuel as I get a 5% rebate on it.Once a year the credit card company sends me a check.Of course with credit cards the trick is to pay them off every month,actually you're using their money for up to 30 days so that a deal too.If a person gets in over their heads on credit cards they'd of gotten in over their heads
some other way just the nature of some people to live beyond their means not the credit card company's fault.

I use my credit cards instead of a debit card. One CC pays me 3% on all gas, 2% on groceries, and 1% on everything else. I get over $300 back on that card. Use it strictly for personal expenses.

Another card I get 2% back on menards purchases.

Sears and Lowes pays 5%.

Another card is only 1% back, I use it for business expenses. I even pay my business insurance with it. Make $200 a year on that card.

I have never paid interest or late fees on any card by setting up auto pay from checking.

No brainer using CC for business, back up receipt for expenses. Very important keeping good records to send to CPA.

Never realized having a good credit score saves me money on all insurance premiums. How many people knew that?

Guess we'll have to agree to disagree on this, JD. I haven't paid a dime in interest to a credit card company in 30 years, but have received thousands in "rewards" in that time. Doesn't sound like a "sucker" game to me, but to each his own.

Have never understood the attraction of debit cards- no float, no rewards, I just don't get it. Although wife has one so she can get 10 cent a gallon discount on gas at Safeway. They used to be really crazy, in that if you lost it or got it hacked, the perp could drain your entire bank account, but I understand that has been changed and now your loss is limited, as it is with credit cards.

And you're usually so reasonable, JD- lol

Debit cards are usually used by people that can't get a credit card as you said there are so many advantages to using a CC.Good credit scores are very important many employers
will check credit scores now when deciding to hire someone or not.People that are financially irresponsible are usually irresponsible in other ways too.

I am the same way George. Its easier to once a week get on line and pay my CC bill then it is to write checks and mail out bills. I know there's a lot of people that at are in debit to the CC company's, but they did that to them selves so it their fault. Blaming the CC companies for the people that are in debit is like blaming murder on the gun not the person using it. Last year I got a free cruise and never paid a dime out of my pocket.
As for the credit score when I built my house I did not have to pay the PMI and all that other stuff do to mine being high. A few years back I was at Deere getting parts and looked at a new 4 seater gator. I talked to the sales man and drove it. Told him I had to get home but would be back tomorrow to talk more . He was sure I would buy it so he ran my credit thru Deere financial and it went thru no problem. So when we agreed on the price I told him to wright it up and I went to truck and got cash. He said why do you finance because it 0% interest. After we talked awhile I agreed. While he was doing the paper work I watched someone demo a zero turn mower. To make this short I ended up paying cash for a mower that day.

4520bw,
We are on the same page. I use CC for everything except I pay cash for vehicles, kaw mule, and tractors. Paid cash for last two rental properties. Didn't borrow for last room addition, but did use CC as much as possible to pay for materials.

I use CC to buy gift cards at Krogers. Gift cards gives me Kroger reward points. Last three times, I got a dollar off per gallon. Saved $35 on 35 gallons.

Just a gimmick to increase rates. State Farm is doing it to me and my agent is local. Ins. cos. have been having a tough go of it if you noticed the insured problems we have been having.

I trashed my credit cards years ago when I realized I'd never pay them off the way they were rigged. Raising 4 kids was never enough money and it took them a longgggg time to realize that daddy wasn't the bank, S&L, or welfare agency. Funny, when the handouts dried up, the kids mysteriously disappeared...........So, having paid cash when I built my house in '79, some 20 odd years later I took out a mortgage on it to pay them off. 3.75%, about 8 years, and $42k to go.

I just use debit or cash. You can have your little kick back and all the accounting and all you have to go with it. I like to keep it simple. Easier to check your statement for fraudulent entries too. Sleep better at night. Wink!

I have to disagree too JD.
Your credit score is determined by a lot of things besides credit cards.
The gas and electric companies, telephone, cable tv and internet companies, water bill, auto loan and mortgage cos all report to the big 3 credit raters.
A tax lien will get noted, even something like a transaction on paypal can be noted if it goes south. Things like non payment of your utilities or even late payment can affect your credit rating, to say nothing of credit cards.
The answer to all that is to live within your means and pay your bills on time of course. On the other hand, I know a goofball couple who have declared bankruptcy a couple of times and are always behind on their bills. But neither of them have ever had an accident or even an insurance claim that I know of in the 25 years I've known them.
It doesn't seem fair to me.

PS,
Being late on doctor bills is another one that can knock your credit rating.

So if you pay off every month and pay no interest you're a sucker ? You need to learn more about credit cards.