March 23, 2021
Agency
Your Credit Score and Your Auto Insurance Premium
You may be aware that your insurance premium is calculated from a number of factors—such as where you live, your age, your claims history and your occupation. However, your credit score also plays a significant role in establishing the cost of your premium.
Keep reading to learn more about why your credit score is used to determine your personal risk and how you can implement credit-bolstering measures to secure a cost-effective premium.
How Your Credit Score Affects Your Premium
Research indicates that if you are responsible with your finances, you will likely also be responsible when driving your vehicle, taking care of your home and managing your health.
Along with loss reports and other personal information gathered on your insurance application, your credit score is used to determine how likely it is that you may experience a loss. Statistics show that a higher credit score indicates a lower risk, which translates to a decreased rate. On the other hand, a lower credit score indicates a higher risk, which leads to an increased rate.
How to Bolster Your Credit Score
Take the following credit-improving steps to get the best possible insurance rates:
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Pay all your bills on time.
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Keep your credit card balances low.
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Apply for credit cards only as needed.
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Search and select loans, mortgages and credit cards with the lowest interest rate within a specific time period.
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Do not close unused credit cards as a means of raising your credit score. Conversely, do not open new accounts to increase your available credit.
How to Review Your Credit Score
To receive an accurate copy of your credit score, be sure to contact a trusted organization. The best organizations to contact for this information include Experian (1-888-397-3742), Equifax (1-800-685-1111) or TransUnion (1-800-888-4213).
For more personal risk management advice and insurance guidance, contact us today.