Credit scores are used so lenders can predict how likely a borrower is to repay a loan and/or make payments on time. Where your credit lies will impact your insurance rates. Freescore.com gives the following on what is considered “good” and “bad” credit:
Good credit score: 680 and Up
Average credit score: 620 to 679
Poor credit score: 580 to 619
Bad credit score: Less than 579
WHY does credit score affect insurance premiums? Research shows that people with low credit scores pose more of a risk to insurance companies than those with high credit scores. It is shown that those with high credit scores are more reliable and responsible and, therefore, file fewer claims than those with lower credit scores.
HOW can you improve your credit score? Credit scores must be monitored and maintained. You are allowed to receive a free credit report from each of the major credit reporting agencies (Equifax, Experian, and TransUnion) upon request. The following are ways to increase your credit report:
- Have a system to pay your bills on time!
- Pay down any and all credit-card balances.
- Stay away from opening new credit. Every time you apply for new credit, an inquiry is added to your report.
- If you can avoid it, don’t file bankruptcy or foreclosure.
- The length of your credit history matters. The longer an account is open, with minimum or no negative reports, the better it will be for your credit score.
- Properly maintain a variety of different credit types. If you do so you could see your credit score raise rapidly.
- Take action to remove any sort of errors on your credit report as soon as possible. Click here to learn how.
- Delete incorrect, negative credit from your history. If you have documentation proving there was an error in your credit report, send a dispute letter to the credit bureau with your claim.
Good credit ratings will not only allow you to save on insurance premiums, but it will also lower interest rates on your credit cards and loans and possibly make you eligible for insurance discounts! If you have any questions or are curious as to whether you are eligible for discounts, contact us! 845-986-1177.