How To Prevent Your Credit Score From Hurting Your Insurance Premiums

How To Prevent Your Credit Score From Hurting Your Insurance Premiums

July 29, 2020
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As if your credit score didn’t affect enough already, it can potentially increase the premium on your insurance policy. If your score is not in the “excellent” range, it is likely that you will face a large increase in premium. For this reason, and countless others, it is very important to maintain an excellent credit score. Sudden drops in your credit score can cause insurance companies to change your rates or drop your insurance all together. Here are some ways that you can keep you credit score in the excellent range and avoid these issues altogether:

Pay your bills on time: This might seem obvious to some, but it’s the best way to make sure that your score doesn’t drop to a level that insurance companies will look down on.

Keep your balances low: Keeping your balance low and at zero if possible is the best way to make sure that your score stays sterling. Paying off the card monthly will make it so that a hefty balance can’t chip away at your score.

Use a low percentage of your credit limit: Using most of your credit limit or maxing out your card is a very good way to knock points off your score. Having a high score will allow you to get a card with a higher limit, but if you have a card with a low limit, be careful of how close to the limit you get. If you consistently are maxing out your card or using a high percentage of your limit your score is going to suffer dramatically.

Keeps several lines of credit, but be careful about which ones: Having several different lines of credit open can give your score a boost, but be careful how you do that. Having cards with low limits and high interest rates can negatively affect you. It’s also not a good idea to open them within quick succession of one another. If you open too many in a short amount of time it can knock some points off.

Keep track of your score: Websites like creditkarma.com are a reputable way for you to check your scores for free with not penalty to your score itself. Many people think that checking your score on these sites will lower it, but that is not the case. Keeping track of your score on these types of sites gives you a good idea of where you are. The sites also contain tools that can help you track and manage your credit.

If you follow these practices, your credit score will stay in a range that is preferred by insurance companies. Bad credit can hurt you in so many different ways. On top of insurance, bad credit can affect loans, leasing, and many other important aspects. Stay on top of your credit so that you do not have to worry about it affecting your insurance policy and the rest of your life.