3 Tips to Boost Your Credit Score Before You Renew Your Auto Insurance

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Auto insurance companies use credit scores to determine the risk of a vehicle owner. Those with good credit scores could save money. It is always wise to work to boost your credit score. It could help reduce what you have to pay each month. But, how do you do so? Before you renew your policy, consider these tips.

Key Ways to Boost a Credit Score

Knowing where your credit is right now is your first goal. Request a free credit report from the credit bureaus. And, use a free service such as Credit Karma(R) or Mint(R) to determine what your score is. Then, apply these tips before renewing your insurance policy.

#1: Make Every Payment on Time

The most important step in improving credit is to make consistent payments. Applying a payment every month before the due date helps ensure your creditors report your reliable payment history. To avoid missing a payment, set up automatic payments. Most lenders allow this. It applies the amount you want every month on the day you choose automatically. Or, if you write checks, keep a notebook of when you paid each bill, each month.

#2: Avoid Applying for Too Much Credit

Applying for numerous loans can lower your credit score. It shows lenders you’re desperate for credit. Instead, aim to apply for new loans only one time every two to three months, or less. You will notice these on your credit report as hard inquiries.

#3: Work to Pay Down What You Owe

Reducing your debt is important. Aim for owing no more than 30 percent of your balance on each account you have. To make this happen, consider these tips:

  • Don’t use your credit cards for purchases. Instead, use a cash system to pay for your bills and to make purchases over the next month.
  • Apply extra payments to your account. For example, if you receive a tax return, bonus, or a gift from someone, use it to pay down your credit.
  • Aim to double, at least, the minimum payment owed. You may need to create a budget to help you do so, but paying the minimum payment extends your debt for years.

Your auto insurance company may not need to know these details about debt. But, they do want to know you are a responsible borrower. As your credit score improves, be sure to let your car insurance agent know. It could help you secure a lower rate.

FAQ’s About 3 Tips to Boost Your Credit Score Before You Renew Your Auto Insurance

What is a credit score and why does it matter for auto insurance?

A credit score is a numerical representation of a person’s creditworthiness. It matters for auto insurance because insurance companies often use it as a factor in determining premiums.

How can a low credit score affect my auto insurance rates?

A low credit score can result in higher auto insurance rates because insurance companies view people with lower scores as higher risk.

How long does it take to see an improvement in my credit score?

It can take several months to see an improvement in your credit score, depending on the actions you take and the specifics of your credit history.

Can I still get auto insurance with a low credit score?

Yes, you can still get auto insurance with a low credit score, but you may have to pay higher premiums.

How often should I check my credit score?

It’s a good idea to check your credit score at least once a year, or more frequently if you’re actively working to improve it.

Are there any downsides to disputing errors on my credit report?

There are no downsides to disputing errors on your credit report, as long as you have evidence to support your dispute.

What are some common errors that can appear on a credit report?

Common errors on credit reports include incorrect personal information, accounts that don’t belong to you, and incorrect payment histories.

Can I improve my credit score by getting a new credit card?

Getting a new credit card can help improve your credit score if you use it responsibly and keep your balances low.

How can I find out what my credit score is?

You can find out your credit score by requesting a free credit report from one of the major credit reporting agencies, such as Equifax, Experian, or TransUnion.

What’s a good credit score for car insurance purposes?

A good credit score for auto insurance purposes usually falls within the range of 670 to 739. Insurance companies often use credit-based insurance scores to evaluate potential risk and determine premiums. Keep in mind that a high credit score can lead to lower car insurance rates.

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