Vocabulary

Glossary

Definitions written for drivers with poor, thin or no credit who want to understand and reduce credit's effect on their premium. Each term links back to the guides where it matters.

Adverse action notice: A required notice when credit information leads to a higher rate, lower tier or denial. Names the bureau, lists reasons and grants a free report.
Credit utilisation: Revolving balances as a share of credit limits. One of the fastest-moving inputs to both credit and insurance scores; under 30% helps, under 10% helps more.
Credit-based insurance score: A score derived from your credit report and weighted to predict insurance losses. Used as a rating factor in most states; banned in California, Hawaii and Massachusetts, with Michigan barring use of the credit score itself.
Deductible: What you pay before collision or comprehensive pays. Raising it shrinks the premium that credit factors multiply.
Extraordinary life circumstance exception: A required exception to credit-based rating in many states when credit damage resulted from events such as serious illness, job loss, divorce, death of a family member, identity theft or disaster.
Non-standard insurance: The market segment for drivers with violations, lapses, no history or other factors standard insurers price steeply. Often uses credit lightly or not at all.
Pay-per-mile insurance: A policy priced as a monthly base plus a per-mile charge. Some programmes use little or no credit information.
Premium: The price of a policy, per six or twelve months.
Rating factor: Any characteristic used to set a premium: record, age, territory, vehicle, mileage, coverage and—where allowed—credit.
Rating tier: A pricing group with its own rates. Credit is a primary tier factor at many insurers; the number and spread of tiers vary widely.
Re-rate: An insurer's recalculation of your premium using updated information—such as an improved credit score—usually available on request once per policy period.
Soft inquiry: A credit-report pull that does not affect your credit score and is not visible to lenders. Insurance quotes use soft inquiries.
Telematics (usage-based insurance): Pricing based partly on measured driving behaviour via an app or device. Shifts weight away from credit at many insurers.