Paying too much for your auto insurance and you don’t know why?
Many things affect your premiums, like your age and where you live. Car insurance companies will often check public records for bankruptcy, collections, foreclosures, liens, charge-offs and similar.
Your credit history is also extremely important. You might as yourself why. The simple truth is that insurance companies believe that your credit history can be used to predict your claims-filing activity. Consumers with better credit will file fewer claims. If you have a bad credit, the insurance company will consider you a greater risk. This will lead to a bigger premium. Lack of credit history might also be a problem if you are a new resident.
Insurance companies can look at your credit information without your expressed permission, so there is nothing you can do about this. Or is it?
In order to improve your insurance credit score, know your numbers. Get your credit report directly from the credit reporting companies, and look for incorrect information. The three national consumer reporting companies are Equifax, Experian and TransUnion. Remember, at your request, they must provide you with a free copy of your credit report once every 12 months. This brochure, Your Access to Free Credit Reports, explains your rights and how to order a free annual credit report.
If you find an error, report it. The credit bureau must investigate the error and respond to you within 30 days. If you are correct, then the credit bureau must correct your credit record. You can also ask the credit bureau to send a notice of the correction to any insurance company that has checked your history in the past six months.
If you don’t succeed in getting a change, you have the right to file a 100-word statement explaining your side of the story and it will be included in your credit report.
If you credit history is correct and the contents is hurting your insurance premiums, make a plan to improve your score.
Number one is always to pay your bills on time. Pay at least the minimum balance due, on time, every month. If you cannot make a payment, talk to your creditor. Don’t think problems will go away by themselves, they won’t.
Limit the number of new credit accounts you apply for. But don’t cancel a credit card you have had for a long time. It may hurt you.
Try not to use more than one-third of your available credit.
When your credit score improves, ask your insurance company to reevaluate your insurance credit score at renewal. You might also want to consider comparing your premium with quotes from other companies.