Which statement about credit-based insurance scores is true?

• A. They use data such as number of inquiries into new accounts
• B. They ignore credit reports
• C. They rely only on occupation
• D. They rely on vehicle color

Answer: (A)

Credit-based insurance scores pull information from a consumer’s credit report to estimate risk. A key part of these scores is the number of inquiries into new credit accounts, along with other credit-related factors such as payment history, outstanding debt, length of credit history, and types of credit used. The reason inquiries are included is that recent credit activity can indicate changes in financial behavior, which can correlate with risk. So the statement about using data like the number of inquiries into new accounts is true. These scores do not ignore credit reports, they aren’t based solely on occupation, and they don’t rely on vehicle color.