Insurance scores allow insurance companies to review the wide variety of variables when determining a driver's risk. We asked an insurance executive why they use it as a factor when so many consumers are against it? His reponse, "If we could find a better risk indicator than credit, we would use it. Since it's introduction, it has proven to be the best rate indicator to date."

For the last few decades these factors included traffic tickets, claims and at-fault incidents. In the past few years many companies changed their risk analysis to a credit based insurance score. Bad credit can then price you out of the policy. Bad credit scores may also result in some financing options being made unavailable to you. Not all companies use a credit based insurance score. So why do some insurance companies now factor credit score into risk? While the insurance industry collects and analyzes the data on driving habits, the lending industry does the same for borrowers. Both of these systems use computer modeling of multivariate analysis to dissect immense amounts of data. Often known as algorithms, these equations allow the companies to analyze how different inputs affect the outputs. After the financial industry spent decades refining a system to determine how likely a borrower is to default or make late payments on a loan, the insurance companies determined credit score is relevant to their risk analysis. By using one algorithm as a factor in their algorithm, insurance companies seek to discover patterns allowing them to minimize claims and increase profits.

Insurance companies now use many items including credit to determine an insurance score. This multivariant solution has allowed them to save insurance premiums for drivers that have a pattern that indicates less exposure to risk.