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Credit History Can Affect Your Insurance Rates

Posted November 07, 2012 in Advice Column, Norwalk

Personal car and home insurance companies consider your credit information when determining how much premium to charge for your insurance. So if you are searching for a better rate on auto insurance, keep in mind that many insurers are looking at your credit history to determine your rates.

The reason that insurance companies use credit information is because they feel there is a direct correlation between consumers’ credit history behaviors and expected claims that may occur. Therefore, they feel that people with better credit behavior are less likely to have an insurance
loss.

Insurance companies still use age, driving history, type of vehicle and where you live to determine how much you should be charged for your insurance. If you have not yet established a credit history, most insurance companies won’t give you a discount or a surcharge based on your credit history.

Insurance companies use many factors in determining your credit score. Here are some examples of those factors:
•    Public records. Bankruptcy, collections, foreclosures, liens and charge-offs.
•    Past payment history. The number and frequency of late payments and the days between the due date and late payment.
•    Length  of credit history. The amount of time you have been in the credit system.
•    Number of open lines of credit. The number of credit cards, whether you use them or not.
•    Type of credit in use. Major credit cards, store credit cards, finance company loans.

Your insurance score may differ from company to company. Lane Insurance represents many insurance companies that have different criteria that will allow you to get a great rate with a good driving record, even if your insurance score is a little lower.

A lower credit score will cause your rate to be a little higher, but your driving record is still the biggest factor in how much you pay for auto insurance. A homeowners policy rate is driven by loss history, age and value of home, but insurance score is a much bigger factor in determining the
rate.

Information provided by Mike Lane, Lane Insurance Agency, Inc., 1225 Sunset Drive, (800) 244-4608.





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