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Fall 2020  Volume 13, Number 3        

How Your Credit Score Reveals Your Suitability for Life Insurance

A good credit rating can open a lot of doors. Not only can it make it easier for you to borrow money at a reasonable interest rate, but it can positively affect your ability to rent or buy a home, apply for a credit card or even get a job.

What surprises a lot of people is that some of the information associated with a credit report could affect whether you can get life insurance or what rates you pay.

Credit bureaus like Experian and TransUnion perform credit ratings on individuals and determine the likelihood of whether a loan will be paid back. The factors that affect credit ratings include:

  • Payment history for loans and credit cards, including late payments
  • Credit utilization rate
  • Type, number and age of credit accounts
  • Total debt
  • Public records
  • Number of new credit accounts
  • Number of inquiries on the individual's credit report

While life insurance companies are not interested in your credit score, they are interested in credit attributes on the report, such as bankruptcy. If you have declared bankruptcy, the insurer will want to determine whether you got into financial difficulties because of bad decisions or because of medical bills, which could indicate a health problem. This doesn't mean you will be automatically rejected. An insurer might require you to wait 12 to 24 months before getting a policy or offer you modified rates.

Other factors that may affect whether you get life insurance or low rates is your medical, driving or prescription drug history, as well as your criminal record if you have one. However, the most important factors are age and health.

Remember that underwriting guidelines vary from company to company, so ask your broker to shop around for a company that will offer you the coverage you want at an economical rate.


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In this issue:

This Just In...

Your Options if You Lose Your Employer-Sponsored Health Care Coverage

The Hidden Costs of $0 Premium Medicare Plans

What You Need to Know About Getting Health Insurance for Yourself — and an Employee

How Your Credit Score Reveals Your Suitability for Life Insurance


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2020 The Insurance 411. www.theinsurance411.com Tel. 877-762-7877.