Insurance Rates and Credit Scores
You can think of a credit score as a silent, omnipotent force that operates behind the scenes and has an invisible effect on certain aspects of your life; especially some important ones. We have already talked about how the financial score and credit report affects your chances of landing a job, a loan, and even how it can affect your married life. Now, the time has come to address how insurance rates are affected by your financial score.
Credit Scores and Insurance Rates
Many view their credit score as a number that only reports their financial health. The fact is that the score is keenly followed by insurance agencies. The reason – the three numbers of the score reveal if you are reliable enough to lend money to. We all know how important money is, and the insurance companies feel the same; no surprises there. They would not want to dole out cash to anyone who may not be able to pay it back. In fact, simply having a good credit score can also affect your insurance rate.
The Better The Score, The Better The Rate
The simple truth is the higher your credit score, the better your insurance rate. Try achieving 750+ financial score and you will see insurance agencies treat you like royalty. On the other hand, if your score just about makes it to the safe zone, you can expect a bit of step-motherly treatment from the same agencies.
The relationship between your credit score and insurance rates are clearly evident when you consider the example of auto insurance.
You might be one of the safest drivers in town, always following the rules, never breaking the speed limit, never receiving a violation, and never indulging in road-rage. And yet, you could very easily pay anywhere from $60 to $500 more than a person who may not be as safe a driver as you are. The reason: that person has a better credit score than you.
It may sound a bit incredible that auto insurance rates rise even when your chances of having an accident are pretty low.
It Is All About The Risk
If you have been wondering why insurance agencies placed a credit score above everything else, the answer is a simple one. It’s concerns risk. A high score, in effect, tells everyone concerned that you are ‘safe’ enough for an affordable insurance rate because you will pay it back.
We understand that your credit score is not a direct or clear indicator of your identity. People often have no idea that they have negative items on their credit reports. People are often victims of identity theft without ever realizing it. Penalizing people with poor credit seems unfair – we sympathize with that. However, it is a standard practice of all insurance companies. This is why it’s important that you check your reports and your score to ensure that you’re in good standing. At Action Credit Repair, our experts will provide a personalized credit consultation, an audit of your credit history, and offer solutions to all of your credit obstacles. Contact us today to speak with an experienced professional: Call 518-945-2299 or email [email protected].