Impact of your score- Believe it or not, but your credit score can have a substantial impact on your ability to obtain insurance as well as the actual cost of the coverage! Insurance companies use these scores to help determine policy eligibility, coverage types available and insurance premium payment options. Credit score and insurance are thus directly linked.
Credit score defined- Now you may ask yourself-What is a credit score? A credit score is commonly defined as an individual’s credit history measured in numbers. It’s essential to acknowledge insurance companies’ right to obtain individual credit records or score without any shape or form of your permission.
Credit score and premium link- Recent studies conducted by insurance companies have shown that persons with low credit scores have an increased tendency to file insurance claims. This has resulted in most insurance companies drawing the conclusion that such persons should pay increasingly more for insurance coverage, while getting substantially less coverage or total coverage denial.
Bettering your score- Did you know that you can do a couple of things to better your score? The best advice is to get negative items cleared and removed from your history, as this will instantly result in a substantial increase in likeliness to get coverage, or for paying a lot less for it.
Impact of collection agencies- When last did you check for collections agency reports on your credit report? If it’s been a while, it would be best to do a check now and in case of a report ask them for low instalments to settle the debt in question. It’s essential to have the agency state in writing that all negative items will be eliminated from your record upon full settlement of debt.
Other factors considered- Other factors can impact your credit score negatively, and thus your credit record in its entirety. Factors considered include payments that are late, numerous open credit lines, or frequent credit limit advancing. It is highly recommended that you try to pay more instead of the minimum amount due on credit cards, close any credit cards which are not readily used or needed, and remain within limit during credit card usage. Mentioned factors can help improve your credit rating as well as coverage premiums.
Errors on your report- Errors on credit reports should be corrected as soon as possible. It would be best to contact relevant party or parties and investigate the problem. After the resolution of any problems, your insurance company should be notified. Credit records are updated regularly, making it possible for insurance companies to see alterations instantly.
No doubt on impact-There is absolutely no doubt that a credit score can greatly impact your ability to obtain insurance as well as the cost of premiums. Should the insurance company decide to run a credit report upon policy renewal, they may go for non-renewal of your insurance policy or raise rates if there has been no improvement in your credit score.
Author: Ken Henry can help you find the solutions to your insurance questions. Get auto insurance rates from the best companies, plus get an exciting tip sheet on auto and home insurance
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