There are a few reasons you may need to cancel your car GEICO insurance. Perhaps your car has been sold,…
As you may know, there are many variables that affect the cost of your car insurance policy. If you compare the price of your policy with a hundred others that have the exact same coverage, like snowflakes, no two will be exactly the same. Factors such as: what kind of car you drive, where you live, your age and your driving history, dramatically effect how expensive your insurance premiums will be.
There’s one variable, however, you might have more control over than others.
Your Credit Score
Credit score has had an increasing role in determining the price of auto insurance policies.
While you probably assume your credit score doesn’t and shouldn’t have anything to do with your driving skills or driving habits, insurance companies beg to differ. They point to statistical evidence that people who have low credit scores are likelier to have accidents, file claims and miss payments, which is why insurance companies pay close attention to this detail when they calculate the cost of every single insurance policy.
Know Your Standing
This is why it is advised to do everything you can to improve your credit rating, especially before you start shopping for a new car insurance policy.
Did you know you can get your credit report for free? If not, you’re not alone. According to the American Bankers Association, 85% of Americans don’t realize that it’s their legal right to get a free credit report from all three credit bureaus once per year.
Be aware though, AnnualCreditReport.com is the only website authorized by the Federal Trade Commission to offer free credit reports. All other sites will invariably try to charge you, often without you even knowing it.
Here’s their video that explains your rights, as well as some interesting information as to why it’s beneficial to review your credit report once per year.
What if I have a Low Score?
Everyone would like to have an excellent credit rating, but many simply do not.
If you feel you are paying extra on your insurance policy because of a bad credit history, don’t give up hope. There are ways to improve your credit rating, and any improvements should be reflected when your auto insurance policy renews or when you switch providers.
Here are some of the quickest ways to mend a credit rating:
- Make sure you have at least 3 credit cards, use them and never miss a bill payment.
- Never use more than 30% of your cumulative available credit. If you’ve breached that amount, pay off enough of your debt to bring it below 30%.
- If you don’t have an installment loan such as a mortgage, car loan or student loan, secure a small personal loan that you can pay off over time.
- Never cancel credit accounts that are in good standing, even if you don’t use them very often. Multiple accounts raise your cumulative available credit, which in turn raises your credit score.
- Set up payment reminders so you never, ever miss a bill deadline again.
Like it or not, credit scores and car insurance premiums are undeniably intertwined. But being aware of their relationship is an important step to keeping your car insurance costs to a minimum.