Credit and Insurance Rates
If you have looked for new auto insurance
lately, you have probably noticed that insurers are asking for your social
security number. That's right, insurance companies are running your credit
in order to determine your auto insurance rate.
How will my credit affect my auto insurance?
Insurance companies consider you a higher risk
if you have poor credit. If you have never had an accident but lose your
job and fall behind on credit card payments, you can expect your insurance
rates to climb.
Does this sound unfair? Well insurers feel that the better your credit,
the more likely you are to make your payments on time and the less likely
you are to file an insurance claim.
Statistically they are right, but this can also negatively effect those
who pay their insurance on time but just got in a little bit of trouble.
What can I do if I have bad credit?
Well you have several choices. You can either
pay the higher premiums, clean up your credit or shop around for another
insurer.
If you are denied insurance because of your credit record, the Fair Credit
Reporting Act allows you to receive a free credit report. Just contact the
credit bureaus to get your report:
Equifax
www.equifax.com
Experian
www.experian.com
Trans Union
www.transunion.com
You can also shop around for other insurance
companies that do not use your credit. Not all of them do, but most
probably will begin to use your credit report in some form when
determining your rate
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