It is a well-known fact that your credit score has a direct impact on the auto insurance premiums that you pay. Those individuals with lower credit scores pay higher premiums, while those with high credit scores can see their car insurance premiums cut in half. If your credit score is affecting the price you pay for car insurance, there are a few things you can do to raise your credit score and help you save money at your insurance agent’s office each time your bill is due.
Check Your Credit Report
First, check your credit report and see what’s on it. You are entitled to one free copy of your credit report per year from each of the three credit-reporting agencies: Equifax, Experian and TransUnion. If you are hoping to lower your car insurance with a better credit rating, t is advisable to request one report every four months, so you can spread them out over the year and keep a regular handle on your finances. Make sure all the accounts listed belong to you and that you aren’t a victim of identity theft. If you have any accounts that are listed as having late payments, verify that you did indeed make the payment late, and if not, write a letter to the creditor disputing the information.
If you have delinquencies showing on your credit report, resolve them as soon as you can, and you may see not only lower insurance rates, but also lower credit card fees. Delinquencies lower your credit score like nothing else. Work extra hours or pick up an odd job working from your home, and tackle these debts as soon as you can. Your credit score will increase as each delinquency is cleared from your credit report.
Lower Your Amount of Outstanding Debt
After you have verified that every debt on your credit report belongs to you, begin paying off these debts. Start with the smallest debt and tackle it first. After it is paid off, go to the next debt, and work down the list until they are all paid off. This takes time to accomplish, but will increase your credit score exponentially.
Decrease Your Debt to Credit Ratio, Increase Your Account Age
Part of your credit score is your debt to credit ratio. The credit bureaus want to see you utilize very little of your available credit. In addition, another part of your credit score is the age of your accounts. The longer your accounts have been open, the higher your credit score is. To lower your car insurance costs, pay off your unused accounts, but keep them open, and don’t use them unless it’s a matter of life or death.
Following these simple steps can raise your credit score and lower your insurance premiums. As always, if you have questions about this article or any other financial topic, seek the counsel of a licensed, responsible financial advisor. Good luck!