Did you know that when you apply for an insurance policy, the agency is likely to pull your credit report? This occurs because your credit score plays a role in the amount of the quote the agency gives you. While your credit score is not the only factor in this calculation, it can affect the amount of money you will pay for car insurance.
Why Credit Scores Matter?
According to Nerd Wallet, insurance companies factor in a person's credit score when determining the risk level they will assume if they provide insurance for the person. Statistics reveal that people with higher credit scores are not as likely to make insurance claims as people are when their scores are low.
Therefore, an insurance company may decide to pull your credit report to see how well you are at managing your money. If the insurance company does not pull your credit report, they may check your credit with another tool.
What Is An
An insurance credit score is another tool that is commonly used today by insurance companies. An insurance credit score is similar to a traditional credit score and is used in the same way–to predict a person's risk level.
According to Insurance Scored,
Is This The Only Factor That Matters?
You must keep in mind that insurance scores and credit scores are not the only factors that insurance companies use to calculate quotes. They will also factor in your gender, age, and driving record.
Your driving record is one of the main factors that can affect the amount of money you pay for your car insurance. Most tickets and accidents fall off a person's driving record within three years, but this varies by state and severity of the incident.
What Can You Do About This?
If you need car insurance right away you will not have time to do anything about this, but you could try to improve your credit score over the next few years. By doing this, your rates may decrease once your credit ratings improve.
If you would like to learn more about how credit ratings affect insurance premiums, contact an insurance agency in your area. To find out more, contact a business like Cornerstone Insurance Group.Share