Credit Score Affects Insurance Premiums

The credit scores can affect the insurance premiums. There are many insurers who are changing their price models to make credit scores a much larger factor for setting up auto insurance premiums. So one needs to keep a good credit score at all times even if one is not about to buy car or house.

There is a lot of correlation between credit score and insurance premium. People who have a lot credit score are likely to file insurance claims with people having high scores. A report states that drivers with best credit scores are involved with around 40% fewer accidents than those with worst credit scores.

But due to the current situations some states have adopted a law which requires insurers to make people request an exception to credit based rating systems that affect the credit score like an injury or illness to themselves for family members which arise out of death of spouse, child, divorce, identity or loss of 3 months leading to deployment overseas.

If you live in a state that hasn’t adapted this law, experts suggest that it would never hurt any agent or insurer about any special circumstances which have affected the credit score even before a policy agent. Some insurers count credit score a lot more than others who set rates. A few companies might offer good deals for people with low scores. If one has sparkling driving history and accidents which aren’t of horrible nature there are some who might overlook this because of strong credit history.

The credit score the insurer uses is slightly different than credit score a potential lender might be using which is generally a “proprietary insurance score” with a formula that the company doesn’t disclose. So one needs to take steps to improve the credit score for each thing he does. One needs to be sure that one needs to pay up bills on times which would lead to keeping up charges as low as 25% of available credit and for which one don’t open or close a lot of cards.