Your Credit Score Could affect Insurance Premiums

When most people think about their credit score, insurance premiums rarely are something that they consider at the same time. These 2 topics seem to be in completely different areas of our financial lives. However, your credit score can actually affect your insurance premiums. Here are a few things to consider about how your score can impact your insurance bill.

Correlation

It is important that you understand the correlation between your credit score and your insurance premiums. Whenever you start shopping for an insurance policy, the insurance company is going to pull your credit score. If your credit score is low, they are going to charge you more for your insurance premiums. If your credit score is high, they are going to lower the amount that they will potentially charge you for your premiums. Many other factors are going to go into the amount that they charge you for your premiums. This is just one of the many criteria that they look at when deciding how much to charge you.

Insurance Score

Whenever the insurance company looks to your credit score, they are not going to look at your credit score in the normal sense. They are not going to be looking at the same credit score that a mortgage lender will look at when evaluating your mortgage application. Instead, they are going to look at your "insurance score." This is a score that is developed specifically for the insurance industry. It looks at areas of your credit that could apply specifically to the insurance industry. If you want to see what your insurance credit score is, you can purchase a copy of your report from a company called True Credit. This is a division of Transunion and it provides insurance credit scores to customers. While it is different than your traditional FICO score, it will usually correlate with it. If you have a low FICO score, you are most likely going to have a low insurance score as well.

What Can be Done

If you are one of those individuals that has a low credit score, you may not want to have to pay more for your insurance premiums. While it can be difficult to get around this problem, there are some things that you could potentially do to lower your insurance premiums.

You could start out by looking at different insurance options that could help you lower your premiums. First of all, you will want to shop around to make sure that you are getting the best rate between all of the insurance companies in the market. Rates can vary greatly from one insurance company to the next. You also want to consider raising your deductible amount so that your premiums will be lower.

You could also spend some time trying to increase your credit score. Start getting on a regular payment schedule with all of your creditors and try to reduce the amount of outstanding balances that you have on credit accounts. After a few months, your credit score should improve and your insurance premiums might be reduced.

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