A day or two back I wrote about my struggles with my insurance provider possibly regarding our credit check. If you want the backstory, go read that post. If you’ve read the post, you can skip the next paragraph.

The shorter version is this: our insurance rates went up 25% between the quote and the rate’s implementation and we were pointed to Clancy’s credit score (which was fine six months ago) as the reason why, though it could be because of an awful ticket I got a couple months ago but through a loophole I have reason to believe that my insurance company (Homefront Insurance Co.) doesn’t know about.

The most frustrating thing to me is the opacity of it all. I want to know why my insurance rates went up 25% and it’s been a month and I have not been able to get an answer. Granted, some of that is because of my own opacity (my not wanting them to find out about the ticket), but only part. Since Clancy’s credit rating was checked six months ago we have to pay out-of-pocket for any inquiries that we want to make.

On the face of it, credit ratings are a great idea. Whether we owe people money or have problems making monthly payments is definitely of interest to businesses that want to extend us credit either of the explicit nature (cash advance, loans, etc) or implicit nature (something requiring regular payments that it’s difficult to turn off and on like utilities). Having that information collected in a place that’s easy for businesses to access is a good thing.

At the same time, it seems as though credit ratings are based as much on probability as they are on history. If someone has people checking on their history, they probably are seeking credit elsewhere and are more risky, so a person is hurt even if that’s not at all the case. If a person is seen as having too many or two few credit accounts, he is seen as risky because he could be stocking up on credit or might be unable to know how to make monthly payments like a credit pro can.

And unfortunately, these numbers are used for far more than just obtaining credit and in ways that affect our lives more generally (car insurance and even employment). That’s one of the parts that has me worried. Homefront isn’t worried that I won’t be able to make my payments. I’ve made them without fail for ten years. Even if I volunteer to pay the entire six-month term in one bulk payment, we’re still penalized. Part of me wants to say how unfair this is, though the other part of me says that it’s the same rationale that they used in order to give me an insurance break because of my good grades in college and that didn’t seem unfair at the time. As with credit, insurance companies use probability (gender, age group, grades, credit scores) as much as history, though it makes more sense in their line of work than in credit agencies.

If it is about our credit rating, though, I’m actually less worried about paying more for insurance for a while than I am about what this is going to mean down the road. There is a huge black cloud that may be following us around and no one has to tell us what it is without extracting some sort of penalty either in the form of further hurting our insurance rating or just costing us money.

I don’t want to turn this into a political post, though I have to go there at least a little. This is one area where the government set out to protect consumers and as near as I can tell actually protected consumers. The fact that we are able to get our annual credit reports is due to a law being passed, as are the requirements of how information is corrected. Unfortunately, none of that is enough to stop some of the current methodology from being a pain in the arse.