More and more consumers are realizing that their credit impacts their insurance premiums on auto, home, life, and renter’s insurance. However, most consumers do not know how insurance companies utilize credit for their analysis. This is where you can save some money if you do some follow up. Many insurance companies know that most consumers will not follow up, and that is where consumers pay more than they should.
You purchase a new car for example, most insurance companies will check your credit score when you take out a new policy. That credit rating is a big factor in your premium. More so than what the insurance companies will tell consumers. At least one insurance company gives a person’s credit rating as the number one factor in an insurance premium. Credit is a greater impact to an auto insurance premium than claims, accidents, and Driving Under the Influence Citations.
Most states allow insurance companies to factor credit scores into your premiums. Only California and Minnesota do not allow it. Insurance companies have demonstrated to courts and politicians that credit scores are a good predictor of insurance claims – or loses for insurance companies.
Unfortunately for many consumers, the insurance companies do not update your credit rating unless they do it on their own (which is usually never), or unless you request it by threatening to go elsewhere with your business. You can end up paying much higher premiums for many moths and even years after you have raised your credit scores.
When you have increased your credit score at least 25 points, you need to demand your insurance company to update your credit rating and recalculate your premium. You should do this request at a minimum when your policy renews. The higher your scores have increased, the lower your premiums.
Follow your credit scores and request your insurance company update your credit rating once you have improve your scores. You could easily save several hundred dollars annually.