Car insurance scores are finally starting to share some of the spotlight with credit scores. Consumers are learning more about what this other credit score model is and how it could raise or lower car insurance costs.
So what exactly is a car insurance score? Here you will find an overview of car insurance scores, how ‘honest’ they are and what you should do with yours to improve your situation.
Why does my credit affect how much I pay for motor insurance?
That is the question that most people ask about car insurance scores: how is their credit rating related to their car insurance Rose Fast Finance?
A car insurance score is calculated based on a formula that uses information from your credit history and credit report, similar to a credit score model. In the same way that credit scores measure your creditworthiness in the eyes of lenders, your car insurance score measures your risky for insurers and, more specifically, your captain’s ability to make a claim. Using your credit information connected to a car insurance score, insurers will rate your car insurance premiums up or down, depending on how risky you are. If you are not familiar with the various factors, this is what adversely affects and influences your score.
Studies show that there is a connection between credit behavior and the warning Capability of filing a claim. In short, those with better creditworthiness tend to make fewer claims, so their insurance is low priced. On the other hand, people with bad credit tend to make more claims and more expensive to insure, so their insurance is priced. As you can see, the impact of a poor credit score in daily life, including your ability to get favorable mortgages, loans and insurance, seeps in.
Whether or not this is a fair method of working is unfortunately a bit of a discussion. Most insurers in most states use auto insurance scores to help determine consumer insurance premiums. The real question is: what should consumers do?
What can I do about my credit and car insurance costs?
The first step before you do something about your car insurance score is just to know.
Joom Credit, home of the free credit score, now offers three free credit scores including the Auto Insurance Score. Within a range of 150 to 950 you can view your insurability from poor to high, plus a short summary that discusses the impact of your car insurance score on your insurance rates. It is such an insight that you can shed a little light on your credit situation so that you can do something about it.
Game plan for improving your car insurance score
The first step is always to know what your credit situation is, and then make a game plan about how you can improve your creditworthiness if you know what it is worth.
Some of the common adverse factors that influence car insurance scores are:
- The oldest credit account has a short history : your oldest account has been opened in the last six years or so.
- The credit history is too recent : a captain percentage of your credit accounts has been opened in the last 2 years and needs a more established history.
- Not enough mix of credit accounts – You need a more diverse credit mix , including credit cards, loans, a mortgage, and more.
- Late payments – Late payments of 30 days or more on one or more accounts can seriously damage your credit.
Do you think one of these factors can contribute to your low car insurance score or poor credit in general? View your own Auto Insurance Score and the issues that affect your insurability. That way you know how you can improve your creditworthiness, improve your credit scores and save money on car insurance.