Thursday, May 1, 2008

I do not borrow, therefore I drive bad??

As many of you probably know, and some of you may be surprised to learn, some car insurance companies use your credit score as a basis to determine your insurance premiums. It was confirmed to me the other day while browsing their website that the company I hold a policy with does just that. I am here to announce that this has got to be one of the stupidest concepts I've ever heard of.
A FICO score (or credit score) is nothing more than a number that says you are good at borrowing money. If the number is low, that means you are good at borrowing, but not very good at paying it back. If the number is high, you are good at borrowing as well, but better at paying it back (both instances allowing you to pay lots of interest. Yay!) Right now, because I still have a car loan I'm repaying, I still have a credit score. Once that goes away there will be no other loans or revolving credit accounts for the FICO gods to judge me by. (My mortgage is held by the previous owner, not a bank, and thus has no effect on my credit score.) Because I have sworn off ever borrowing money again, eventually the number will dwindle until I no longer have a FICO score.
So because I choose not to borrow money, there's a very high possibility that my auto insurance premiums could rise in the future. Because I choose to put myself in the best financial position possible (owing NO man anything) the auto insurance folks are supposing this will effect my driving habits negatively, increase my chances for auto theft, and also increase the chance that the guy driving behind me will rear-end me. RIDICULOUS.
For the record, I will not be playing this game. There are companies who do not base your premiums on your I-Like-To-Borrow-Money score. As soon as my current company shows any sign of raising my rates because I cease borrowing money, they have lost a customer.
I wonder how long it took the banks to convince these insurance agencies that people who are not paying interest on loans are terrible drivers?