How and why does MetLife Auto & Home use credit reports?
Is the credit score used the same as a bank?
Do all insurance companies use the same credit score?
What information in my credit report impacts my PFM level?
Will MetLife Auto & Home tell me before it orders my credit report?
How does MetLife Auto & Home protect their customers’ privacy?
Does a customer’s agent have access to credit reports?
How are customers notified if their credit history affects coverage?
Don’t many credit reports have errors on them?
Does the use of credit reports result in any benefits to customers?
Doesn’t a good driving record count?
I had to declare bankruptcy.
I don't have a credit history.
How and why does MetLife Auto & Home® use credit reports?
At MetLife Auto & Home, we use credit bureau reports from the major reporting agencies -- Equifax, Trans Union, and Experian -- as part of our insurance underwriting (determining which applicants we will insure) and rating (calculating customers’ premiums) process. Our research has proven that certain credit characteristics are strong predictors of a customer’s likelihood of submitting a claim. Using a method we call Personal Financial Management (PFM), we use those credit characteristics to rank an individual into PFM levels that indicates whether a person has a greater risk or a lower risk of submitting a claim.
Of course, a PFM level is only one of many factors that go into the underwriting and rating decisions. Other factors may include:
• Type of car driven
• Claim history
• Driving history
• Home age and construction type
• Distance between the home and the fire department
• The coverages selected
Using the greatest amount of available information –- including PFM –- enables us to offer all our customers a more accurate premium.
Some states have limitations on the use of credit information for rating and underwriting purposes; where those limitations apply, we are in full compliance.
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Is the credit score that MetLife Auto & Home uses the same as the one used by banks and other money lenders?
No. Banks and lenders use a credit score developed from information contained in credit reports that correlates with the likelihood of defaulting on a loan. We calculate our own score based on credit characteristics in those reports that correlate with the likelihood of filing future claims.
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Do all insurance companies use the same credit score?
No. There are many different credit-scoring models used by the various insurance companies.
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What information in my credit report impacts my PFM level?
Some of the credit characteristics that may be considered for PFM are:
• Any public record filings, such as bankruptcy, foreclosure, wage garnishment, civil judgment, or tax lien.
• Accounts that show any collection activity (excluding those from medical-related providers or facilities).
• Any accounts that are not in good standing or are currently past due.
• Amount of outstanding debt in relation to revolving credit limits.
• Length of time credit has been established.
• Number of accounts (such as car loans and credit cards) opened in the last 24 months.
• Number of inquiries in the last 24 months. These may consist of applications for loans, credit cards, mortgages, or any other form of credit. Note: Multiple lender inquiries are considered as only one inquiry, if they're coded on the consumer’s credit report as being from the home mortgage industry and made within 30 days of one another. The same treatment applies to multiple utility inquiries and auto financing inquiries.
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Will MetLife Auto & Home tell me before it orders my credit report?
Yes. When a customer completes an application for insurance, our agents or sales representatives advise our potential customers that we order various consumer reports, such as Motor Vehicle reports and claims-history reports. One of these consumer reports is a credit report.
Insurers have also been expressly permitted to utilize credit information in their underwriting and rating decisions since the passage of the “Fair Credit Reporting Act.” In addition, we include an important notice in all of our policy packages, titled Consumer Privacy Notice, that includes more detailed information about our use of consumer reports.
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How does MetLife Auto & Home protect their customers’ privacy?
We only share certain information with entities unrelated to MetLife Auto & Home when they service our business and have agreed to our high standards of confidentiality or when we are required by law to do so. We do not sell credit details or other personal information about our customers to telemarketers or other entities not related to MetLife Auto & Home. We comply with federal and state privacy laws, the Fair Credit Reporting Act, and the Graham Leach-Bliley Act.
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Does a customer’s agent have access to credit reports?
No. MetLife Auto & Home agents don't have access to credit reports. Agents only see the PFM level for which their customers qualify. If a customer wants to know additional details regarding their credit report, they are provided with the name and contact information of the customer reporting agency that gave MetLife Auto & Home the report.
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How are customers notified if their credit history affects their coverage or premium?
Our goal is to fully inform customers about the factors, including credit, that affect their policy. Customers who do not qualify for the very best rates or who are otherwise negatively affected based on information in their credit report will be provided an Important Notice. The notice will describe the primary credit characteristics that influenced their PFM level. The PFM Important Notice is mailed at the start of an insurance policy and it is included in each policy renewal package when credit is reordered.
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Don’t many credit reports have errors on them?
Since some credit reports contain errors, we believe it is important to notify all of our customers when they are not getting the very lowest rates for insurance when a credit report is used. That way, our customers can check their credit report to make certain that the information in the report is 100 percent accurate.
MetLife Auto & Home will reevaluate its initial underwriting or rating decision if an applicant informs us that errors in their credit report have been corrected. When we order a credit report, we provide a statement that alerts consumers that they can obtain a copy of the report we have used if we have taken adverse action based on information in the report.
Correcting an error on a credit report is generally fairly easy; the consumer needs to contact the credit bureau and ask them to investigate the item in dispute. Please note that if there is an error on the credit report, and it is corrected, the insurance underwriter can ensure that the policy is issued with the corrected PFM level and rate. We cannot change the PFM level until the errors contained within the credit report have been corrected and reevaluated through the PFM model.
We urge all consumers to review their own credit reports for accuracy at least once a year by obtaining a free copy of their credit report from each of the major reporting agencies (Equifax, Trans Union, Experian) by calling 1-877-322-8228, by visiting their website, or by writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281.
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Does the use of credit reports result in any benefits to customers?
We believe it does. These benefits include:
• Your good credit qualities may offset other negative issues. Using the PFM allows us to offer policies to some consumers who otherwise might not qualify for coverage. That's because the ability of certain credit characteristics to predict the likelihood of future claims can even offset negative factors such as an insurance applicant’s driving record.
• You may pay less. Many customers pay less in premiums because, according to their PFM level, they present a lower-than-average risk. This is similar to the way that auto insurance premiums take into account driving experience. Mature drivers pay lower rates for insurance than teenagers do because experienced drivers as a group are statistically proven less likely to suffer a loss. If your PFM level indicates that you're statistically less likely to submit a claim, you may pay less in insurance premiums.
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Doesn’t a good driving record count for something, even if my credit history isn’t great?
Yes, your driving history or claims history still counts for a lot. Credit history is only one of the many factors we use to determine whether to offer someone a policy and/or which rate to charge. Drivers with good driving records are rewarded with other discounts.
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I had to declare bankruptcy because I got sick, and my premium increased because of my credit report. Is there anything you can do for me?
Yes. If your credit information has been adversely impacted by what's known as an "extraordinary personal event," we can make an exception to adjust your PFM level and your premium, if applicable. An extraordinary personal event may include, but is not limited to:
• an acute or chronic medical condition, illness, injury, or disease
• divorce
• death of a spouse, child, or parent
• involuntary loss of employment for more than three consecutive months
• identity theft
• a loss that makes your home uninhabitable
However, we must receive reasonable documentation of the circumstance and a complete explanation of how it negatively affected your credit before any adjustments are made.
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I don't have a credit history. Will MetLife Auto & Home charge me more for insurance or refuse to insure me?
Not necessarily. Remember that credit information is only one of the variables used in the underwriting and rating process, so credit plays a role, but it is not the only factor used.
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