Your Credit Score Affects Your Insurance Rate
Posted by Sherry Louk, FICO Certified Credit Consultant
I had the opportunity to participate recently at a think tank in which a representative from a major auto and home insurance carrier spoke. Since joining Just Credit Solutions, LLC last year, I have learned many new things regarding what affects my credit score and what does not.
It is not surprising to learn that our credit scores impact our insurance rates as well. Each insurance carrier has designed an algorithm to come up with an insurance scoring model. This particular company gives scores 1-16. Your insurance carrier may score differently. A One is the perfect score, and you guessed it, you pretty much have to have an excellent credit score and a few decades worth of clean driving.
It is within the consumers’ power to lower their insurance premium!
What goes into the algorithm? Data such as your credit score, debt to income ratio, maxed out credit cards, driving record, the number of claims you have filed, whether you’ve been in an accident that wasn’t your fault.
The reason they care so much about your finances is because someone with little resources that has an auto accident or damage to their home is more likely to file a claim than to take care of it themselves. Additionally, once you file a claim you lose your “Good Client” rating and that lowers your score and costs you! My agent said 7-11 is about average. I’m average! But being average still means you pay more than the above average consumer who falls between 2-6.
More people in America have a credit score below 600 today than in 2007. That means most Americans can’t qualify for a home loan and they will pay $500-$1000 more a year in insurance premiums
How can you improve your insurance rating? Well, first and foremost improve your credit score! At Just Credit Solutions, LLC we take our job seriously. Our goal is to help each individual with a personalized plan to improve their score and then teach them how to keep it going so they can reach a high score of 740 and above! When our client’s credit score climbs we encourage them to call their agent and tell them they’d like to be re-evaluated. Now this is not wise to do if you’ve had any driving violations in the past 2 years, but if you’ve kept your driving record clean your improved credit score will save you some cash!
Save Some Credit Points with One Credit Inquiry!
You can save money by shopping rates with different carriers to find the one that has everything you want including a great rating. But remember to get the shopping and decision made within 45 days. Legally you have the right to shop as many insurance agencies as you like for 45 days, and only get hit with one inquiry on your credit reports, no matter how many agents pulled your credit during the 45 days. An inquiry stays on your report up to 2 years and steals a few points off the top of your score. So keep your time frame for shopping rates tight!
Just Credit Solutions, LLC is a credit consulting company founded on the principles of educating and helping the consumer on what to do if they are in need of credit help. If you or someone you know may need our services please Contact Us today! We are here to help you! The Team at Just Credit Solutions, LLC