Auto insurance companies use a number of key factors to calculate the price of your auto insurance; being aware of these important factors will help you save on your car insurance. Did you know that one of the important factors that help determine how much you will pay is your credit score? I'll explain why this is a key factor and give you tips to improve your credit score.
Insurers check your credit report and weigh both the favorable and unfavorable information in order to calculate your premiums. Information such as income, gender, nationality, religion and ethnic group are not taken into account when calculating this score.
Auto insurers use the information on your credit report to create an insurance score which may also be called an insurance credit score. Insurance scores have been developed in order to predict your level of risk and to help determine the price of your auto insurance. The Federal Trade Commission released a report stating that credit based insurance scores can effectively predict risk and may also result in benefits for consumers.
So now you must be asking yourself, how can I check my credit score? Once a year you can request a free copy of your credit report from the US credit bureaus - Equifax, TransUnion, and Experian. The catch is that this doesn't include your credit score. The only way to get your credit score at no cost is to sign up for a free trial with one of the credit bureaus. Requesting your credit report does not affect your score.
If you prefer to pay for more features myFICO Score Watch not only provides your FICO® Score but also alerts you whenever changes occur. Get unlimited access to the FICO® Score Simulator and search tools that can help you find the best available rates based on your credit score. $14.95 per month (first month just $4.95).
But how can you improve your credit score? It's important to open new credit accounts only when needed and to avoid opening too many accounts in a short period of time as this could negatively affect your credit score. The best way to increase your score is simply by using your credit cards responsibly - this means paying on time, not spending above your means and not letting your credit cards reach their limit. A long-established credit history also affects your credit score favorably, so the sooner you start working on your credit score the better. Raising your credit score takes time and patience, so if you already have a good credit score, make sure to maintain it!
It goes without saying that having good credit has a huge impact on your life, not only does it allow you to pay lower interest rates, apply for the best credit cards, obtain a loan for a home or find a job, now it also helps you lower your premiums on car insurance. So as you can see, it certainly pays off to have good credit card habits!
It's important to compare different insurance companies in order to find the best possible deal, compare insurance rates now on GET.com to find the best car insurance quotes!