Boost Your Credit Rating to Reduce Auto Insurance Costs
One of the factors auto insurance agencies consider when providing a price for clients may be your credit rating. Not all states allow this. If your state does, it means your insurer may take a look at your credit report to determine risk.
If you make payments on time and are responsible, the agency will likely view you as less of a risk. What happens if your credit score isn’t what it should be? You should work towards improving it for many reasons. But one reason is the impact it may have on your car insurance.
To do so, consider these tips. Remember, your credit rating is important for a wide variety of financial reasons.
#1: Focus on paying your bills on time every time.
This is the biggest factor impacting your credit score. If you are unable remember payment dates, set up auto payments through your lenders. Create a calendar or use an app to help you to remember to make payments on time. This includes all types of loans, insurance payments, and utilities.
#2: Keep your balances as low as possible.
Using as little credit as possible will play a big difference in your credit rating. If you max out your credit cards, you are showing less responsible financial behavior. Pay down your credit cards so that the balance is significantly lower than the amount of available credit. This can give you a good boost in your credit score over time.
#3: Avoid opening too many lines of credit.
You should never close a line of credit. Doing so will lead to a drop in the age of your credit. However, you also do not want to try to open more than a couple of lines of credit each year. Doing so shows lenders you are desperate for funds.
How can all this help you with your auto insurance rates? In some cases, improving your credit rating will help to show your car insurance agency how responsible you are. This can help you to qualify for lower premiums for your vehicles. Talk to your agency to find out if they use credit ratings as a factor in determining your premium costs. And, if so, get to work improving your score so you can achieve your goals.