subject: Credit Scores And Insurance Premiums [print this page] Did you know if you have a high credit score, your insurance premiums will go down? There are lots of nice ways to save more money on your car insurance. This may seem personal, but the truth is it's just business and if you have a good credit score, you can benefit.
To date, in the last 10 or 20 years insurance companies have started rewarding consumers who have high credit scores with lower premiums. This may seem paradoxical, because some people might ask, what does credit score have to do with insurance? The answer is in the predictive qualities of behavior. People who have good credit scores maintain a healthy hygiene financially. What this means is that they practice prudence, and are more careful in general.
Perhaps they are consumers with great risk assessment, or perhaps they are lower risk people in general. That it may be inferred, good credit score holders observe spending limits and pay their bills on time.
All that said, apparently the answers lie in statistics. People who specialize in this field of data correlation have decided that the probability of someone having an accident is a lot lower when you have a look at higher credit scoring consumers. Insurance companies will reward consumers that have fewer accidents in their history, as well as in a predicting a consumer's behavior.
It is necessary to keep track of your credit score so that you are not a victim of fraud. Furthermore, you want to prevent any errors show up. Errors or identity mix ups can cause a great deal of harm to your credit score. Now you know that insurance is also affected by credit scores. Of course, everybody's situation is different so you should check with an agent and not act on this advice. (Disclaimer: we're not professionals nor do we say we are, and all advice needs to be discussed with professionals).
Credit scores are determined by three reporting agencies. There are many ways to boost your credit score, and you can get exactly one free report (as provided by US government mandate) of your credit score. However, it can be easy to drop your score as well. Each time you inquire for a credit card, or a credit line increase, the three reporting agencies will open your records. Even opening your credit score report too many times within a time period can adversely affect your credit score. Thus, if you are considering changing insurance, for example, you may want to seek out your credit score in advance to see if you are in a position to negotiate at all.
Homeowner's insurance prices are actually very highly correlated with the condition of your credit score. Similarly, car insurance prices are also correlated with your credit score. At the same time, credit scores are just one factor that insurance companies look at when deciding your premium. If you have a lower credit score than you hope, there is always room for improvement.
by: Casey Trillbar
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