When It Comes To Insurance Costs, Your Credit Record Can Be Just As Important As Your Driving Record
As a smart consumer, it should be no surprise to you that your credit report can affect the interest rate you get on a car loan. The better your credit score, the better your rate. But did you know your credit can also influence your auto and home insurance premiums?
It’s called insurance scoring, and it can drive up or drive down your insurance premiums.
Insurance companies believe there is a correlation between credit history and the likelihood of someone filing a claim. So now, almost 90% of auto insurance companies, and an increasing number of home insurers use credit information to determine your premiums…or if they should even insure you at all.
What is your insurance score? You can order your insurance scores any time by clicking here. Your insurance score takes into account factors such as your outstanding debt…length of credit history…payment history…and amount of revolving credit (the credit card balances you carry over month to month).
You might be thinking: “Hey, this sounds a lot like a credit score.” Well, you’re right. The two are very similar. However, while both insurance and credit scores look at the same characteristics of your credit report, insurers place more importance on the factors that show long-term stability. They place emphasis on how regularly you pay rather than how much you owe.
Can you improve your score? Keeping your credit healthy can be a big boost to your insurance score (and your credit score, of course!). Here are a few quick tips for a stellar score:
* Limit the number of credit cards you apply for aim to apply for only the ones you know you’ll need
* Pay your bills on time sounds simple, but it is a huge factor in your score
* Be responsible keep your balances well under your credit limit
You’ll find more ideas on how to improve your credit at the Credit Learning Center.
Stay in the driver’s seat One of the best ways to ensure your credit is helping (and not hurting) you is to check it regularly. By checking your credit report frequently, you can stay on top of your information easily.
By making a real effort to improve your credit, you could lower your premiums quite a bit, especially if your credit wasn’t up to par in the past. And that could mean a little extra money in your pocket every month.
Just keep in mind that your insurance score is only part of your premium equation. Things like your age, driving record (for auto insurance and home property value (for home insurance) might also be factors. Ask your insurance agent for the complete scoop on your premiums.
Getting a Good Bad Credit Mortgage Rate
When you have bad credit and attempt to refinance all conforming lenders will decline you almost immediately. Since the conforming lenders have the good low interest rates but will not approve you you have to explore other sources for a good bad credit mortgage rate. If you are a home owner that has damaged Credit and are looking to refinance your home you may be wondering what your options are you should be aware that there are loan programs available for borrowers with low credit scores, late mortgage payments and other situations that cause bad credit so getting a loan should not be the challenge. The challenge however is using the right programs to get a a good bad credit mortgage rate.
Any good mortgage broker will tell you that FHA is your best shot for a good interest rate, however not everyone will qualify. The main consideration for FHA is the last 12 months of mortgage payments had to have been paid on time with o 30 day lates. Debt to income ratios are also required to be under 40% in most cases.
If for some reason you cannot qualify for an FHA loan you can still get a good bad credit mortgage rate from a sub prime mortgage lender. Sub prime loans will be above market rate and a good mortgage broker who specializes in bad credit borrowers should be able to explain to you the many different sub prime programs that you may qualify for and help you make the best choice. If you go the sub prime route be prepared for higher closing costs and lender fees.
Having bad credit does not have to mean settling for a loan at 14%. You can still get a good bad credit mortgage rate by talking to a good qualified Mortgage broker who offers both FHA and Sub Prime you will come out on top!
What Might Affect Your Car Or Auto Insurance Rates?
Every insurance company will have certain factors based on which they determine the policy rates. These factors include your driving record, credit ratings, driver’s sex or gender, age of the driver, distance or kilometers driven on an average etc. Are you using it for commercial purpose or for your personal use. These are some of the factors that influence your car insurance rates. You must consider these while applying for an auto policy.
Your driving record:
If you have a clean driving record, you are considered a low risk candidate. It shows that you are not a rash driver and hence are a low risk for the company. They need not pay you high compensation more frequently.
Age is also a deciding factor:
A teenager or any one under 25 years of age is considered a rash driver. He or she is more likely to meet with an accident while the older ones are more careful while driving. Hence, a young driver is considered a high risk driver.
Marital status:
If you are married you pay lesser in terms of premiums in comparision to a person unmarried.
Gender:
Compared to men, ladies are low risk drivers. They drive slowly and are hence safer. Hence the rates on their policies are lower.
Geography:
If you are in the suburbs, were there is very little traffic the risk is low. Therefore your policy rates are lesser.
Type of vehicle:
A highly priced vehicle will cost less in comparision to a low priced vehicle. If you opt for a low priced vehicle, your policy rates will gradually come down.
Credit scores:
If your credit score is positive, you will get better policy rates in comparison to a negative credit scoring. This proves enough of credit worthiness and assures the company that you will pay back the premiums on time.
Car Insurance – Credit Scores and What They Mean to Your Payments
Your car insurance payments may be on the rise and it may have nothing to do with your driving. Many people assume that it is their road record which is the main factor which decides your premiums. A speeding ticket, a fender-bender or maybe a teen driver at home; all of these things can drive up your automobile insurance premiums. But there is another factor determining how much you pay, one you may never have considered and that is your credit record.
Nearly every insurance company in Wisconsin now uses credit scores to set premiums, putting same stress if not more on your credit score. You might think that it is unfair and even the even the State Senator Jeff Plale has co-sponsored a bill to ban the practice because he says that on the surface this practice doesn’t seem to make sense. “I just don’t see the correlation between your making your payments to best by and your ability to safely operate an automobile,” said Jeff Plale, Senator of Wisconsin.
However, the insurance companies in Wisconsin think otherwise. They think that there is a strong co relation between the credit scores and the risk of loss. There have been several studies which demonstrated a high co relation between your credit score and your likelihood to file a claim. And this is exactly what the insurance companies are assessing, not the risk of you getting into an accident, but the risk of you filing a claim. And this is the reason they think that credit scores are a great way to predict the future.
The Wisconsin Insurance alliance says, “Credit scoring consistently provides rate decreases…to over 60% of consumers.” But this new practice might not make everyone happy. The people who will be most affected by it are those who have been irresponsible in using their credits or who may have some errors in their credit report.
The authorities of Wisconsin have banned the insurance companies to make decisions based only on the credit history. However, they may use credit as one of the many other aspects when setting the rates. To find out how you stand be sure to check online for the latest rates available to you in your area.