How Does Credit Score Affect My Insurance Rates?

How Does Credit Score Affect My Insurance Rates?Credit scores determine much of what we’re able to purchase in the U.S., but did you know that it can affect your insurance rates?

We often see and hear about how important it is for one to maintain a good credit score, and everyone knows that a good credit score results in lower interest rates. This is because your good credit score is an indicator that you have a record of paying your dues on time. What’s less known is how your credit score affects the rates in which you pay your insurance. Here’s what you need to know about how your credit score affects your insurance rates.

How Your Credit Affects Insurance Rates

  1. Lower Credit Is a Sign of Higher Risk. Insurance statisticians are constantly looking at the data to help insurance companies predict their customers’ behavior because the company makes more money when predictions are more accurate. In the 90s, they became aware that a high credit score was often indicative of a low risk.
  2. Insurance Companies Generate Credit Scores. Lenders usually just use one of the standard credit bureau scores to determine yours. Insurance companies, however, use their own formula to generate an insurance-related credit score for you. They vary from company to company, so it’s hard to nail down a standard formula.
  3. Great Credit Can Reduce Your Premiums. You’d think that your auto insurance premiums are based on driving records, but they are actually based on your financial record as well. A good financial record may qualify you for discounts on your monthly premiums for your auto insurance.

Maintaining a good credit score will not only earn you more access to a good car and nice home, but it may also land you discounts on your auto and home insurance premiums. To learn more about how you can pay less for your auto and home insurance in Carlisle, Pennsylvania, contact Miller Insurance Associates.