How Your Credit History Affects Your Automobile Insurance Cost
What many people do not think about when they are considering their credit history and credit score is how it will affect items such as your automobile insurance. When looking at how much your auto insurance premiums will be it is not a myth that your auto insurance company will take into consideration whether you have a good to perfect credit score or if your credit score is more on the poor side of things. Many consumers are just not learning about this and what credit score modeling is. This is what is used to figure the cost of your automobile insurance premium.
How Does My Credit Score Affect My Automobile Insurance Premium
When people find out that their automobile insurance premium is affected by their credit history and credit scores many want to know how it is affected and why their credit history is connected to their automobile insurance. For many this does not make sense.
When you apply for automobile insurance from any insurance company you will find that they all use a formula to figure out what your automobile insurance score is. From here this is the number that is used when giving you a calculation as to how much your insurance premiums will be. This formula is comprised of your credit history information as well as your current credit report. The formula is very similar to how your credit score would be figured. The auto insurance companies are looking to see how much of a risk you will be in the same manner that a lender would. Once you have your auto insurance score the company can give you a premium based on how risky they believe you to be.
What Can I Do About My Credit Score And Insurance Rates
One of the most important things you can do regarding your credit score is to know what your score is. When you know what your score is many credit reporting companies will also give you your auto insurance score as well. Knowing these scores might not seem like it will help you in the future but if you do not have the knowledge of what your score is there is not any way that you can improve it and save yourself money in the future.
Improving Your Automobile Insurance Score
The first step to improving your automobile insurance score is staying on top of your credit situation. Once you have that number you can take care of improving it so that you can save money on your insurance. Some of the most common items on your credit history that affect your automobile score are your oldest account on your credit report is not very old. This is usually seen with accounts that are only about six years old. Often times you will find that your credit history is not old enough which means that your accounts are only two years old or so. Many companies will like to see that you have accounts older than two years. And the big one that hurts many people is that you have late payments showing on your credit history. If you have accounts that are thirty days late on payments you will find that this will greatly damage your credit.
Conclusion
It is very important to take care of your credit score and credit history even if you do not plan on obtaining any installment loans online in the near future. Many people do not realize that their credit history follows them and will affect them on things such as automobile insurance. The better your credit score is the better your car insurance premiums will be.
Category: Car Insurance
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