home insurance. Have you ever wondered why? What do your spending history and credit
cards and money habits have in common with insurance? The concept is debatable, but it is a
fact that your credit rating has a significant impact on your auto insurance rates.
It may make sense if you know that insurance companies determine insurance rates by
classifying people in groups, based on age, gender, location, accidents, violations, credit history
and more. Research shows that as a group, people with lower credit scores pose a larger risk to
the insurance companies that are protecting them (Insurance Information Institute). Perhaps
they are distracted and have more accidents. On the other hand, people who manage their
credit tend to be more responsible and file fewer auto and home claims.
How Can I Improve My Credit Score?
It’s important to monitor your credit score, so get yours, either online or by phone. You are
entitled to a free credit report from each of the three major credit reporting agencies every
year. To improve your score over time:
- Pay your bills on time. Automatic bill pay might help you avoid missing deadlines.
- Be aware of your total debt. Pay down any credit-card balances so they are significantly less than half of your total credit limit.
- The length of your credit history matters, so think about that before closing old accounts.
- If you see an error on your report, take steps to have it removed.