It happens when you least expect it: you open your recent car insurance or home insurance bill and realize that your renewal rates have gone up. There are many reasons why this can occur, including calling in claims, being found at fault for accidents, getting a speeding ticket, and the one that’s commonly forgotten about, adjustments made to your credit score.
What role does your credit score play in your insurance costs? You’d be surprised at just how much it can affect how much you pay monthly, quarterly, or half-yearly for the protection that you need.
Want to know more about how your credit score is impacting your insurance rates? Let’s explore.
The Effects of Your Credit Score
Insurance companies believe that the lower your credit score, the more likely you are to get into an accident. This means that they charge you more for having a score that’s lower than 600, or in some cases, 580. On average, people with a low credit score pay around 97% more than those with a higher score. All of your insurance policies, including your home, liability, and auto ones are affected by this.
Does Your Insurance Company Use Your Credit Score?
While most insurance companies, especially the major ones, do take your credit score into account when determining your premiums, some don’t. It’s important to ask your insurance agent if they follow this practice, and if so, see if there’s any exceptions or options for adjusting your rates even if your credit score is low.
It’s also worth asking how often they check credit scores and revise premiums. For example, if they only check your score once a year, but you’ve spent the time to improve it, you might be able to request that they check it now in order to get your costs lowered.
How to Raise Your Credit Score
Thankfully, there are some things that you can do to raise your credit score, and thus, lower your insurance premiums. These strategies include:
Checking Your Credit Reports – You should check your credit reports at least once a year to see if they contain any incorrect information. If they do, you’ll need to follow the protocols put into place by each credit bureau in order to dispute the wrong info. You may need a police report in order to make it clear that the incorrect information is the result of having your credit stolen.
Standard Methods – Another option involves using the usual methods in order to raise your score. This requires avoiding hard credit checks, like those for credit cards and loans, as well as paying your bills on time. Remember that your credit score looks at your debt to credit ratio, so if you pay off a card or loan, you’ll need to leave it open if possible. Closing it can hurt your credit in some cases.
Have Questions? Contact Spivey Insurance
If you’re wondering exactly how your insurance premiums are affected by your credit score or have any other questions regarding your home or auto insurance, please reach out to us at Spivey Insurance. Our knowledgeable agents will be able to help you explore your options and find the coverage that meets your needs.
