What is the relationship between credit scores and expected insurance costs?

• A. No correlation
• B. Inverse correlation
• C. Negative correlation
• D. Strong correlation between scores and expected costs

Answer: (D)

Credit scores are used in insurance pricing because they predict future claim costs. Higher scores tend to be associated with lower loss frequency and severity, which leads to lower premiums. The relationship observed in data is strong, meaning the scores reliably track with expected costs. So describing the relationship as a strong correlation best captures both the predictive power and the direction (better scores relate to lower costs) of how credit scores relate to insurance costs.