What is the impact of your score?- There is absolutely no doubt that credit score and its insurance impact are significant, especially when it comes to an individual’s ability to get insurance coverage, and the expense of coverage. Insurance companies use credit report scores on a daily basis to determine a person’s eligibility to get coverage, coverage types and premium payment methods as well as options.
Credit score defined- Now you may ask yourself, what is a credit score exactly? A credit score is your credit history measurement in a numeric format. It’s important to keep in mind that insurance companies will not need your permission to run a credit score check.
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.
Credit score improvement- Some good news is that you can do a few things to improve your credit score. It’s recommended that you get these problematic items cleaned up and preferably removed from your credit history to greatly increase your likelihood of getting insurance coverage or paying substantially lower insurance premiums.
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.
Definite link- With all said and done, there is no shadow of a doubt that a credit report can impact one’s ability to get insurance, and also cost of their premiums. If your current insurance company decides to conduct a credit check upon renewal of your policy, they can potentially opt for policy non-renewal or substantial rate raise should there be little to no credit score improvement.
Author: Ken Henry can help you find the solutions to your insurance questions. Get auto insurance advice and quotes from 5 top companies, plus get an exciting tip sheet on auto and home insurance
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