The Importance of Having a Good Credit Score to
Protect Yourself, Your Family, And Your Insurance Rates
This article was provided by Rentown.net
If you think that your credit score is used only to get a loan application approved or getting a job then think again. Credit score also holds great significance when it comes to insurance rates and keeping your financial condition strong.
Whether you’re getting an insurance for your vehicle, home or even your life, your credit score will be looked into.
The outcome is simple. People with a bad credit score are charged with a higher insurance fee than the ones who have a good credit score.
Why Insurance Companies Look Into The Credit Score Before Deciding The Charges?
Insurance providers are known to gather financial data of a person before giving them insurance rates. They do this so as to know the amount of risk they’re taking with the person by providing them with insurance.
They will look into your FICO score (which should be above 700 to lay a good impression) to determine how you have been dealing with your finances in the past.
If your credit score is good, they see it as a low risk, hence less price will be charged on you. In case your credit score is low then the insurance providers see it as a risk and will charge you a higher fee.
What Do They Look Into:
- Financial History.
- Driving Records.
- Employment history.
- Family’s information.
- Diseases you have.
- Smoker or not etc.
What they look into largely depends on the type of insurance you are applying for. For example, your health will be looked into if you apply for life insurance, but they will not care for it as much in case of phone insurance.
Other than this, they will look into your financial history to see how you have been dealing with your finances. If you have existing debts or had several in the past, they will take the amount of time it took for you to pay the debt.
If in case, you had failed to pay your debts then you’re looking at skyrocketing insurance rates because it gives an impression that you’re irresponsible when it comes to managing finances.
Your credit history will also be looked into to see how you are with utilizing credits. If you have gone bankrupt in the past by using too much credit or have made late payments then you are seen as a risky person.
Your driving history will also be dug up and looked into your driving track record in case you’re going for vehicle insurance. For instance, how many speeding tickets you’ve got so far. How’s your driving record etc. How many accidents you’ve been into. All these things will pose a threat to the insurance provider and will make them charge a higher insurance rate on you.
They will learn about your employment history and determine your employment risk for your current job.
Other than that, they’ll look into your payment schedules to see if you pay your dues in time and how much in debt you are currently or had been in the past.
They’ll learn about you and your family’s medical condition as well. Also, if you had paid medical bills on time or not.
Since some of these factors can be judged just by looking at your credit score, it is important to pay attention to it. In case you have a low credit score, your insurance provider will most probably see you as an insurance liability and will charge a lot more than what they’ll do to a person with a good credit score.
How To Get The Lowest Insurance Fee?
It’s possible to get insurance for you and your family in the lowest possible fee if you have a good credit score.
A good credit score implies having a good credit history, no bankruptcy, no debts, no late payments etc.
All in all, getting charged at a low insurance fee depends upon how good your credit score is.
Sadly, a lot of Americans do not have a good credit score. But, worry not. There are ways to improve it. Let’s have a look:
How Can You Improve Your Credit Score?
- Paying your bills on time.
- Having no more than one or two credit cards (more credit cards can be difficult to manage).
- Disassociate accounts in case of a joint account.
- Watch out for credit card balances and keep them low.
While all these tricks work, but if your score is really very low, you will have to look for professionals. There is help available in the form of credit repair companies.
Such companies do not only help improve your credit score, but can also help you find a reliable insurance provider so that you can get a good rate on your insurance.
All in all, a bad credit score is risky not only for you but your entire family. Hence, make sure you have a credit score before you apply for insurance.
DSNews.com – A recent Experian study found women come out ahead when comparing how mortgage debt is managed, despite the fact that women generally earn less income than men.
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New York Times – In most cases, it is easier to qualify for a home mortgage by applying with another person – be it a spouse or partner, or even a close friend or sibling. But problems may arise if the other person’s credit score is less than stellar.