A Better Credit Rating = A Better Insurance Premium

home_insurance-hands-2Insurance companies are protecting their profitability by incorporating an insurance score as one of their key rating factors. An insurance score is different from your credit score. Companies use certain elements from your credit history, not your credit score, in order to predict the likelihood of future insurance losses.  An insurance score is usually calculated based on some of the following information:
1.    Your Payment History: Have you made late payments or missed a payment?
2.    Your Length of Credit History: How long have you been using credit?
3.    Your current balance on each account compared to your highest previous balance.
4.    Total Number of Credit Accounts
5.    Number of Credit Inquiries (in some states and soft inquires do not count)
6.    In some states Bankruptcies, foreclosures and other collection account activity.

It is important to know that the types of credit information used in determining your insurance score can vary from state to state and company to company. However, the last decade has proven that more and more insurance companies are going to an insurance scoring system in calculating their rating factors.

Before you shop for your next insurance policy, be sure to check your credit reports for any errors as it may be beneficial for you to have these items corrected prior to buying a new policy. An insurance score is a snapshot of your current situation as of the day you obtain your policy, so if your situation changes, make sure you contact you company for their policy on re-calculating your insurance score. In many cases this can save the consumer hundreds of dollars as your score may have improved significantly since the time you first opened your policy.

For additional questions please do not hesitate to contact me via email or phone.

Richard Wilson

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