The Link Between Your Credit Score and Your Insurance Rate
Posted on April 21st, 2011
As far as insurance companies are concerned, they would like to see you pay off your credit card debt every month. That may not be what credit card companies want to see, since they will earn less money off you, but it shows fiscal responsibility and thus makes you a low risk to insurance companies.
Never Use All Of Your Available Credit
Just because you have been approved for a $10,000 line of credit does not mean that you should use it. It means that the credit card company feels that you are an acceptable risk for paying back that large of a balance. Actually, if you could keep the amount you charge to credit cards well below the 50% mark of credit available to you, you are much better off. It shows you arent prone to impulse spending. You are likely to pay attention to your finances and what you can afford. That makes you a responsible individual. Insurance companies have found that if you are responsible with your finances, you are also responsible in other areas of your life. You are more likely to maintain your car properly and less likely to file insurance claims.
Eliminate Credit Accounts You No Longer Use
You dont want to have more open credit than necessary weighing against your creditworthiness. It is helpful to request your annual free credit report to determine which accounts are still considered open. Some credit card companies are not good about canceling accounts no longer in use. Make sure you actually send a written notification to any credit card company whose credit card you no longer use to officially close the account.
You can request your credit report at . You are entitled to a free report every year and you should take advantage of this. It will also show you if anyone has fraudulently opened accounts in your name that you didnt even know about. Anything on your credit report affects your score, whether your actions caused the item to appear on the report or not. You do have the right to protest any errors on the credit report.
If you take care of the above steps, your insurance score should be excellent and your insurance rates will be as low as they can be before adding extra discounts.
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Tags: Insurance, Insurance Rate
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