You have a clean driving record no tickets, no accidents and no fender benders, so you may expect to have a low insurance rate. But that’s not the case. Even if you’re a safe driver, you may be paying higher premiums, if you have a poor credit record. If you want to lower your car premiums, make the effort to boost your credit score. You may find that you get better rates, the next time you apply for an auto insurance quote.
In most states, insurers use your credit score as one of the factors in determining what's called your insurance score. If you have a low insurance score, you will be charged more for your insurance premium, because you are considered more likely to file a claim on your policy. According to the Insurance Information Institute, actuarial studies show how a person manages his financial affairs is a good predictor of future insurance claims. Check your credit score, before you apply for an auto insurance quote.
Some states place limitations on how much information in your credit history can be use to calculate an insurance score. For instance, some states require insurance companies to make exceptions for customers whose credit history has been affected by an extraordinary event, such as temporary job loss, a death in the immediate family, a catastrophic illness, etc. Some also mandate insurers to make exceptions for customers who have been with the company for a period of time without filing claims and incurring violations. Find out about your state's laws before you get an auto insurance quote.
4 tips for improving your credit score
However, your credit score could still be adversely affected by bankruptcy, collections, foreclosures, liens, late payments, credit inquiries (such as applying for a credit card), open lines of credit and outstanding debt. Here are 5 steps you can take to improve your credit score:
1. Pay your bills on time. Late payments and collections can have a negative impact on your credit score. Also credit card companies can increase your interest rates, if you pay your bills late.
2. Keep balances low on unsecured revolving debt, such as credit cards. High outstanding debt can affect your credit score. Use no more than 30 percent of your available credit at any given time and try to pay off your balance in full whenever possible.
3. Apply for and open new credit accounts only as needed. Maintain the necessary minimum number of credit cards and other credit accounts. Limit yourself a maximum of three or four cards and keep your balances low.If you decide to crack down on your credit card use by cutting up a credit card, go ahead and do it. However, don't close the account as this will raise your balance-to-credit-limit ratio and can have a negative impact on your credit score.
4. Request a copy of your credit report every year. Review for accuracy and request any corrections in writing.
If you practice these steps, you will be able to improve your credit score over time and get lower premiums. When you are ready to buy a new car policy, you can call agents in your local area, contact insurance companies directly or use InsuranceQuotes.com to instantly get a competitive auto insurance quote from the nation’s leading insurance providers. Simply fill out a simple online form on InsuranceQuotes.com to find the right insurance coverage at the best possible price. Take the time to protect you and your family today.