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 With Auto Insurance?
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 and Your Auto Insurance Rates?
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.
FAQ’s About Credit Score Improving: When to Update Your Auto Insurance
How often should I check my credit score to see if it has improved?
It’s recommended to check your credit score at least once a year to ensure accuracy and identify any areas for improvement. If you’re actively working on improving your credit, you may want to check it more frequently.
What are some ways to improve my credit score?
Paying bills on time, reducing debt, and keeping credit card balances low are all ways to improve your credit score.
How long does it take for credit score improvements to impact auto insurance rates?
It can take several months for credit score improvements to be reflected in auto insurance rates. However, it’s important to regularly check your rates and shop around for better options.
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 end up paying higher rates.
Will my auto insurance rates go down automatically if my credit score improves?
Not necessarily. You may need to contact your insurance company and request a rate review to see if your improved credit score qualifies you for lower rates.
How can I find auto insurance companies that don’t use credit scores?
Some states prohibit the use of credit scores in determining auto insurance rates. You can check with your state insurance department or do a search for “no credit check auto insurance” to find companies that don’t use credit scores.
What other factors besides credit score affect auto insurance rates?
Factors such as age, driving record, type of vehicle, and location can all impact auto insurance rates.
Is it worth it to pay for credit monitoring services?
It depends on your personal preference and level of concern for identity theft and credit fraud. Some monitoring services can also help you track your credit score and identify areas for improvement.
Can I dispute errors on my credit report that are affecting my auto insurance rates?
Yes, you can dispute errors on your credit report with the credit reporting agencies. It’s important to regularly check your credit report