Why Having Good Credit Matters for Insurance
We all know that your age, driving experience, and claim history all affect your car insurance. But what about your credit and does it just affect your auto policy? Well, in short, the answer is no. It can affect your homeowner’s insurance and life insurance rates as well. Statistics show that someone with higher credit scores is more likely to pay their premiums on time and less likely to file claims. Good credit is something that insurance companies are looking for when assessing someone’s policy costs. However, these insurance credit scores work somewhat differently than FICO credit scores. While FICO scores assess whether or not you will pay your loan back on time insurance credit scores are used to determine how well you handle your money. Here are the factors that will affect the insurance credit score.
Payment histories
Length of credit history
Types of credit used to build credit (credit cards, loans, etc.)
Things not considered when developing an insurance credit score:
Sex
Age
Marital Status
Geographic location
Ethnicity
Having a good FICO score will inevitably help you lead to a good insurance credit score. If you’re unsure what your score is, you can request one from LexisNexis or TransUnion. You can get one free copy every year. Nowadays, most banks will allow you to access your score through their mobile apps, such as Chase Bank mobile. However, if you need to request your report you can do so at Annual Credit Report. Not to worry, if your credit isn’t stellar you can still get home, life, and auto insurance. Just keep in mind that your premiums will be slightly higher than those with good credit history.