THE SECRET TO LOWER AUTO INSURANCE
| by Gary Brown | April 10, 2007
You and your best friend are insured with the same auto insurance company, but he/she pays substantially less in auto insurance premiums than you. You both have clean driving records, live in the same zip code and drive similar vehicles. What is the difference?
The chances are, it is something called an "Insurance Credit Score".
About 90% of all insurance companies have implemented credit scores when they calculate auto premiums. Some use it to a greater effect than others, but the key is understanding how it affects you.
When you call for an auto quote, in our area people search under insurance tempe, the insurance company may run your credit score first. That score determines what "tier" you are placed into. Even if you have been with the same company for a long time, they may increase or decrease your premium depending upon your current insurance credit score.
This credit score tier is the difference between you and your neighbor. After you are placed into the appropriate tier the computer then factors in your driving record, zip code, type of vehicle, and any discounts. It is possible that two people can own the same vehicle, live in the same zip code, with all the same discounts, and each have a clean driving record and still have different premiums. That is the credit score affect.
Many states have seen the issue taken up in the courts. To date, the insurers have done well in showing a correlation between high claims frequency and lower credit scores and lower claims frequency with people who have better credit. They accomplished this by researching and evaluating literally thousands of past claims.
How can you combat the use of credit scoring on your auto insurance policy if you have less than stellar credit? The only solution is to understand what you can do and work to improve it. Along the way, you likely will improve your overall credit and find you can get better rates on other credit, such as home loans, car loans, and other credit applications.
INSURANCE CREDIT SCORES
These scoring models vary from company to company. You need to contact your agent to find out exactly what your current company likes and dislikes. Here are some general tips: Reduce the number of active, open credit card accounts. You may have 10 cards and 5 have zero balances, but that could still reduce your score. These scoring models do not like too much open credit. Secondly, do not max out your credit cards. Leave a decent gap between what your credit line is and the amount charged (called "available credit"). Third, and most obvious, is to pay your bills on time.
Do this over a good period of time, then go search for lower auto and home insurance premium.
Find more valuable information at Insurance Tempe
The chances are, it is something called an "Insurance Credit Score".
About 90% of all insurance companies have implemented credit scores when they calculate auto premiums. Some use it to a greater effect than others, but the key is understanding how it affects you.
When you call for an auto quote, in our area people search under insurance tempe, the insurance company may run your credit score first. That score determines what "tier" you are placed into. Even if you have been with the same company for a long time, they may increase or decrease your premium depending upon your current insurance credit score.
This credit score tier is the difference between you and your neighbor. After you are placed into the appropriate tier the computer then factors in your driving record, zip code, type of vehicle, and any discounts. It is possible that two people can own the same vehicle, live in the same zip code, with all the same discounts, and each have a clean driving record and still have different premiums. That is the credit score affect.
Many states have seen the issue taken up in the courts. To date, the insurers have done well in showing a correlation between high claims frequency and lower credit scores and lower claims frequency with people who have better credit. They accomplished this by researching and evaluating literally thousands of past claims.
How can you combat the use of credit scoring on your auto insurance policy if you have less than stellar credit? The only solution is to understand what you can do and work to improve it. Along the way, you likely will improve your overall credit and find you can get better rates on other credit, such as home loans, car loans, and other credit applications.
INSURANCE CREDIT SCORES
These scoring models vary from company to company. You need to contact your agent to find out exactly what your current company likes and dislikes. Here are some general tips: Reduce the number of active, open credit card accounts. You may have 10 cards and 5 have zero balances, but that could still reduce your score. These scoring models do not like too much open credit. Secondly, do not max out your credit cards. Leave a decent gap between what your credit line is and the amount charged (called "available credit"). Third, and most obvious, is to pay your bills on time.
Do this over a good period of time, then go search for lower auto and home insurance premium.
Find more valuable information at Insurance Tempe
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