We know that credit score is being used by different loan providers and credit card companies to assess the credit history of a person. It is their basis whether they will approved a loan or credit card application or not.
When you have a Charter Ping An Car Insurance, chances are that your premium rate are based on your current credit score.
Today, motor insurance companies look at the credit score of a person applying for an auto insurance.
Read on and let us know how your credit score affects your vehicle policy premium and how to maintain a good credit score.
What is credit score?
A credit score refers to the figure that represents the creditworthiness of an individual.
A credit score ranges from 300 to 500. These numbers can be lower or higher depending on the ability of the individual to repay his/her loan and credit card balance.
Who uses credit score?
- Loan providers
- Credit card companies
- Insurance companies
Why insurance companies check credit score?
Many insurance providers like vehicle insurance companies check the credit score of an individual who are getting a vehicle policy.
The credit score is used to determine the probability of an individual to file a car insurance claim. According to statistics, people with low credit scores are more likely to file a claim than those who have a higher credit score.
On the other hand, not all car insurance companies use credit score. Some providers just use your driving history and vehicle type you have to determine your insurance premium. So, it will still depend on the car insurance company you applied for.
Furthermore, car insurance companies may use your credit score, but they can also use different formulas to evaluate you. So, credit score is just a part of the bigger picture.
The benefits of a good credit score
- Getting a low interest loan
- Higher chance of approval in credit card and loan application
- Higher credit limit
- Qualify for better credit card deals and perks
- Wide variety of loan product options
- Easier approval for home rentals
- More purchasing power
- Getting a job
- Better car insurance premium rates
How to maintain a good credit score?
Since there are variety of benefits of having a good credit score, it is essential to maintain one to enjoy these benefits. Here are some things to do to maintain a good credit score:
- Pay bills on time
- Do not apply for multiple credit cards
- Keep credit card balance low
- Pay your debt immediately
- Consolidate card balances
- Review credit report and look for any errors
Many motor insurance providers in the market look not only on the requirements provided by an individual when getting an auto insurance but at the person’s credit score as well.
With this, you must maintain a good credit score to get a better auto insurance rates. Follow the tips mentioned above to have a better credit score and eventually a get a favorable car insurance premium.