Credit Score Improving? When to Update Your Auto Insurance
Many people work hard to improve their credit score. That is a good thing. As it increases, though, be sure to let your auto insurance provider know about the change. In some situations, it could help reduce your car insurance rates. Insurers use this information to make decisions about whether to provide coverage. And, it impacts how much you may pay, too. Here’s how it works.
Why Does a Credit Score Matter?
When it comes to choosing car insurance, you may not think a credit score has anything to do with the process. But, some insurers use this information to determine how much of a risk an applicant poses to the company. Individuals with a high score are generally those who pay their bills on time. They are more responsible with their finances. This may mean they are less likely to report numerous claims. They may be safer drivers.
How can they know this? The insurance industry studies this information. They correlate credit scores to accident records and claim files. They base the decision for you on what other driver experiences are. The past often represents what is likely to happen in the future.
Is Your Credit Score Hurting You?
The only way to know if your car insurance company uses credit scores is to ask. Then, let the agent know your score improved over the last few months. Reporting an increase of 20 or more points, or from one rating to the next, can help. Now, it is not likely the agency will reduce your rates immediately. Rather, the next time your policy is up for renewal, you may see your rates drop. If you do not see changes, call your auto insurance agent at that time to inquire.
Some insurers may not lower your rates even if you improve significantly. But, if you are working to improve your financial health, consider applying for a new policy. You do not have to wait until your existing one expires to do so. Get a quote from an agency willing to use this information to help you save money. Ask about other savings options as well.
Credit scores matter. However, your driving records and the number of claims you file also play a role in your costs. Work with your auto insurance provider to find the best match for coverage and your budget.