Surprisingly, a clean driving record or recently built home may not be enough to keep your insurance premiums down.
Many United States insurance companies use credit scores to determine which drivers are more at risk. Believe it or not, bad credit could actually increase your premiums 20 to 50 percent more than a person with good credit.
As small as it may seem, one late payment may affect your insurance premiums. Insurance companies want to make sure that you will pay your premiums on time, and be less likely to file an insurance claim.
What Is a Credit Score?
Your credit score is the numerical value that’s calculated from your financial history.
When looking at your credit score, insurers will look at the following:
- Your current debt
- Your available credit
- Your payment history
Those individuals who have a high credit score will find that getting approved will be much easier than those with a low credit score. When insurance companies look at your credit score they are looking to see how reliable you are when dealing with your finances.
How to Help Bad Credit Scores
Developing a solid credit score may be a difficult tasks for those who struggle with making payments on time. Below is a list of some steps to follow when dealing with bad credit:
- Create a financial plan
- Develop good saving habits
- Organize your finances
- Pay bills on time
- Use your credit cards sensibly
- Focus on paying off debt
These basic tips could help turn a bad credit score into a good score over time. And as a result, your could reduce your insurance premiums and become a better candidate for low premiums, loans, mortgage loans, etc.
Other Factors That Can Affect Premiums
When applying for car or homeowners insurance, there are many factors beyond your credit score that help determine your premiums.
For car insurance, this could be your car’s make or model, annual mileage, or your driving record.
If you apply for homeowners insurance, the age or the construction of your home could be additional deciding factors that can affect your insurance premiums.
We’re Here to Help
We want to help you get the best insurance coverage for whatever insurance policy you’re searching for. We understand the needs of the Louisiana community, and we want to help you the best way we can.