If you're shopping for car insurance, you might want to listen up. I'm going to reveal a secret that can help you take action and get the best insurance rates possible--something we all want, right?
According to experts, 90 percent of auto insurance companies look at your credit scores before determining your car insurance quotes and premiums.
Why?
Studies show an undeniable correlation between credit ratings and insurance claims. Specifically, the lower your ratings, the more likely you are to file insurance claims. Conversely, the higher your scores, the less likely you are to file claims...and the less risk you pose to your insurer.
It's as simple as that.
On the positive side, many people--about two-thirds of all auto insurance policyholders, to be exact--actually benefit from lower premiums due to better-than-average credit scores. But many people aren't even aware this is actually working in their favor!
If you're shopping for car insurance, there are ways to boost your credit scores and get the best auto insurance rates available. Try these techniques recommended by experts:
#1: Pay your bills on time--consistently. Delinquent payments can have a major negative impact on your score. However, the longer you pay your bills on time, the better your score will be.
#2: Keep balances low on credit cards. High outstanding debt can also affect your score negatively. In fact, maxing out your credit cards could lower your average score by as much as 70 points!
#3: Don't open accounts for new credit cards unnecessarily. New accounts will lower your average account age, which could actually lower your score by up to 10 points.
#4: Use credit cards--but manage them responsibly. In general, having credit cards and installment loans (and paying them off in a timely manner) will raise your score. Someone with no credit cards tends to pose higher risk than someone who has credit cards and manages them responsibly.
#5: Check your credit report often and remove any errors. By making sure that your credit history is accurate, you ensure a more reliable score.
#6: Avoid too many inquiries. Car insurance companies interpret these as a sign you have been actively seeking credit, and may be financially overextended.
Please note: closing a credit account doesn't make it go away. A closed account will still show up on your credit report, and may be factored into your overall score.
With a little action on your part, you can keep auto insurance rates low and credit scores high. Then your money will stay right where it belongs: in your pocket!
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About InsureMe
InsureMe, an Englewood, Colorado-based company, links agents nationwide with consumers shopping for insurance. Specializing in home, life, long-term care, health and car insurance quotes, the InsureMe network provides thousands of agents with auto insurance leads every year. For more information, visit InsureMe.com.
