Most people are aware that one of many underwriting factors used in determining one's actual auto or homeowner insurance rate is credit scoring. What many do not know is that a good credit score helps to lower your insurance cost. The Insurance Information Institute, according to a recent article from Safeco Insurance, indicates that upwards of two-thirds of policyholders have a lower premium because of good credit.
The bad side of credit scoring is that the other one-third of policyholders have higher premiums due to their credit history. The remedy is obviously trying to improve your credit in the future to more favorably affect your insurance premiums.
So, the next time you receive the privacy notice from your insurance company indicating that your credit score has affected your insurance premium, do not think that this is a bad thing. You are most likely in the two-thirds of those policyholders who are getting better premiums because of good credit.
Frank Zimmerman
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