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Insurance Solutions

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Todd Thompson Insurance
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Low credit score

ould mean high insurance premiums

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Most of us are aware that lenders check our credit and consider our credit score but more and more

insurance companies are doing it as well. Insurance companies tend to assume that a bad credit

report

may also indicate that you’re a bad driver.

According to Esurance Over 90% of U.S. Insurance companies, including Esurance, use credit-based

insurance scores to establish eligibility for payment plans and to help determine insurance rates. (In

case you’re wondering, credit-based insurance scores predict how likely you’ll pay your bills in the

future.) Actuaries and research analysts have found that the scores help predict your accident

potential.

If you have a high credit score, you can generally expect lower auto insurance rates than

someone with

a low credit score.

People with bad credit pay up to 50% more for car insurance! That’s nothing new however, as

insurance underwriting has been using credit scoring to determine rates for some time. On the flip

side, people with good credit are going to benefit from lower premiums. That’s great news for the

percentage that have good credit but considering that almost 70% of credit reports contain errors, even

those who think they have good credit may not.

Credit

repair and an annual audit

could definitely be worth your time . Since

three

out of four credit

reports contain errors, you may be paying more than you should, regardless.

Hiring a credit repair company may be a wise investment. In that instance, it is financially beneficial.

Credit repair

can payoff big and could cut your car insurance rate by up to 50%. That’s a substantial

savings worth your time By taking a look at your credit reports, you can identify any potential issues that

may affect your credit history.

It’s not clear whether the insurance company you are with uses a FICO credit header or a different type

of score but the bottom line is, they are interested in your credit score and not how much debt you have

or home loans outstanding. They care about overall credit history and the score gives them that.

Many people feel that using a credit score to determine car insurance rates is discrimination because

people with low income or prior credit issues are targeted for the higher premiums. The jury seems to

still be out on whether the insurance industry will come up with something more fair and balanced for

all.

It just goes to show that taking care of your credit is becoming more important and affecting more

aspects of your overall financial health. It’s a task worthy of undertaking to save some money. If you

haven’t taken a look at your credit in at least a year, you need to review all three credit reports to make

sure they are in deed accurate. If you do have bad credit, take steps now to remedy those issues and

hopefully lower your car insurance premiums.

Be sure to get at least three insurance quotes before you settle on one. Ask the insurance company if

they use your credit to determine what rate you’ll pay. You can also find out more about your state

insurance laws at http://www.iii.org/media/companies/state_org/insur_departments/

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