Tips to Boost Your Credit Could Lower Your Insurance Premiums
More and more you hear that your credit rating can affect how much you pay for auto and home insurance. Have you ever wondered why? What do your spending history and credit cards and money habits have in common with insurance? The concept is debatable, but it is a fact that your credit rating has a significant impact on your auto insurance rates.
It may make sense if you know that insurance companies determine insurance rates by classifying people in groups, based on age, gender, location, accidents, violations, credit history and more. Research shows that as a group, people with lower credit scores pose a larger risk to the insurance companies that are protecting them (Insurance Information Institute). Perhaps they are distracted and have more accidents. On the other hand, people who manage their credit tend to be more responsible and file fewer auto and home claims.
How Can I Improve My Credit Score?
It’s important to monitor your credit score, so get yours, either online or by phone. You are entitled to a free credit report from each of the three major credit reporting agencies every year. To improve your score over time:
· Pay your bills on time. Automatic bill pay might help you avoid missing deadlines.
· Be aware of your total debt. Pay down any credit-card balances so they are significantly less than half of your total credit limit.
· The length of your credit history matters, so think about that before closing old accounts.
· If you see an error on your report, take steps to have it removed.