Does credit score affect car insurance rates?

The answer to that is an emphatic yes! The car insurance companies look at your credit score to help them decide how much you will have to pay for car insurance. They use a lot of data to try to estimate the probability you will submit an insurance claim. They use this probability to calculate your costs.

You may be surprised to find that most people have trouble with their credit at some point in their lives. Some people have much worse credit than others. Of course, if your credit is less than perfect, it doesn’t mean that your car insurance will be super expensive. Credit score are just one thing that the insurance company will take into account.

However, if you are credit challenged, then you will want to change that situation. Having a better credit score will save you a lot of money, including lower car insurance costs. The following information will give you some pointers that will start you on your way to good credit.

Improve your credit score for lower car insurance costs

Check up on your credit score by requesting a credit report from each of the three major credit reporting agencies. Some websites provide this service free of charge when you sign up for a trial membership. Once you are aware of exactly how much you owe, you will be able to take the steps to improve your credit.

Be sure to talk things over with your creditor. With the current information, you can decide which accounts most need your attention. Paying the most important ones first will save you from paying out any additional charges. Making payment arrangements with as many of your creditors as possible can ease some of the financial burden, while at the same time allowing you to focus your attention on those creditors who won’t allow you to set up a payment plan.

Credit reporting agencies make mistakes, too. As you review your credit report, you need to document all negative entries. Contact the reporting agency any time you see mistakes in your report. If the negative entries are accurate, having the details available makes it easy to start improving those accounts.

As with anything, be sure that you know your rights when it comes to collection agencies. There is no threat of prison or jail for failure to pay your bills, and it is illegal for collection agencies to suggest otherwise. As the law regarding collection agencies varies from state to state, make sure you are aware of what laws apply to you. It is not right for the debt collector to threaten you or verbally abuse you.

Your ideal credit card target balance is 30% or lower. This is the amount of a balance you carry on your cards. You get this percentage by dividing the balance you owe by your total credit limit. When you keep your payments lower than this level, it will help your credit profile in general.

Your balance should be < 30% of your credit limit

Take the time to negotiate with collection agencies. Most collection agencies are quite open to making a deal. If you avoid the collection agencies, they will not be able or willing to help you out. Make sure the agency knows that you are willing to do what it takes to pay off your debt. Sometimes you can even cut your debt in half just by using these techniques and speaking to debt collectors when contacted by them. If you are willing to negotiate, chances are collection agencies will want to work with you. Collection agencies will gladly lower your payments and make compromises if you are making efforts.

Using this advice will help keep you stay up to date with your credit problems. These techniques will enable you to repair a bad credit record and develop good credit habits for a more prosperous future. And if you can do that, then you’ll see your car insurance rates improve, too!

Does credit score affect car insurance rates?