Posts Tagged ‘credit score’

Homeowner’s Insurance: How to Save Yourself Some Cash

Friday, April 23rd, 2010

If you’re a homeowner, you want to protect your home and all that is in it. However, you certainly do not want to go broke in the process. If it seems like your homeowner’s insurance rates are eating up more of your income than you would like, there are a few things you can do to bring that rate back down to a level that has you breathing a sigh of relief.

Most importantly, shopping around could be the best way to find a rate you can live with. Compare prices and go with the best plan that does not demand a couple of your beloved limbs in the process. However, if this doesn’t cut it for you, look into the following options:

Your Credit Score

How is your credit score looking these days? If you have run into a few speed bumps here and there and it has adversely affected your credit, this could be the reason for your higher insurance rate. As long as you are ready to take on the expense of homeowner’s insurance and keep your premiums paid, you might want to look into a insurance company who does not check your credit. This could save you a bundle right up front.

Keep Your Policy Updated

If you have sold some valuable possessions, you obviously won’t be needing the same amount of coverage. Check your policy often and ensure that things you no longer own are taken off and be sure to add on new purchases.

Association Benefits

Are you a member of some alumni or business association? Whatever group you belong to, find out if there are group insurance rates or discounts that you could take advantage of to save some money in the long run.

Non-Smoking Home?

If no one in your home smokes, and you adamantly do not allowing smoking inside your home, mention this to the insurance company. Considering the fact that smoking accounts for 23,000 residential fires per year, your lower risk home could bring you a discount in premiums.

There are many, many more ways to save yourself a ton of money on your homeowners insurance. Don’t be afraid to look into your options and take advantage of each and every discount you are eligible for.

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Love, Marriage, and Auto Insurance Costs

Monday, November 23rd, 2009

A new marriage means a new life with your partner, new experiences, as well as a few new financial challenges.  With the exchange of vows, you and your new spouse share more than just your love, hopes, and dreams-you share your credit scores and insurance costs too!  Before or soon after tying the knot, try these tested and true tips to save on your auto insurance premiums.

Joint Policy Custody

Once you are married, shop around for new insurance policies that offer package discounts.  Oftentimes, if you’re willing to purchase two policies-one for you, one for your spouse-then you can take advantage of added discounts.  If you do happen to find an attractive policy during your search, be sure to contact your current provider to inform them that you’re considering leaving in order to save on your costs.  With this announcement, your provider may be willing to negotiate a lower rate for you and your spouse in order to keep your business.

Choosing the Primary Policy Holder

While the stereotypes assert otherwise, studies show that women are far less likely to be involved in an auto accident.  Since women are statistically less prone to collisions and car wrecks, women can often take advantage of lower premium rates.  If this happens to be true in your relationship, then ask your provider about the savings benefits that can be gained from making the “Mrs.” the main policy holder.  With a woman as the primary driver, making the man the secondary driver, statistical odds are working in towards one’s favor, as insurance companies are forced to charge higher premium rates for drivers who pose greater risks.

Investing in Your Future

Once you and your spouse have been married for some time, you may be in the fortunate circumstance of having never been in an accident.  If this is the case, then you most likely have never had any need to make a claim to your insurance company.  Oftentimes, as insurance companies find claim-free couples to be very appealing and desirable clients, a provider may offer you a negotiation in order to maintain your “zero claims” status.  For example, if you and your spouse have been able to maintain your policy for four or more years without having to make a claim, then your provider may allow you to pay a small fee in exchange for a “zero claims” continued status.  If you opt for this plan, then you’ll be able to maintain your very low “zero claims” insurance coverage rates, even if you do end up needing to make a claim in the near future!

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Is Your Credit Score Raising Your Insurance Rates?

Wednesday, October 21st, 2009

Believe it or not, your credit score may either be helping or hurting your insurance rates.  While banks, lenders, and even employers look into your credit score to determine your general financial reliability, your various insurance providers may very well be examining the same private information.  From auto insurance to home owner’s coverage, an array of policy prices can be influenced by your personal score.

Insurance Premiums and Credit Scores

While each state has its own insurance regulations and restrictions, nearly all states allow insurance providers to evaluate your credit score in order to individually formulate your costs for coverage.  In fact, a recent United States Supreme Court decision has even extended these powers, as insurance providers are now no longer required to inform clients whether or not their credit score raised the costs for the insurance policy.  Currently, various reviews of insurance practices reveal that an estimated 90 percent of all auto and home insurance providers factor in a client’s credit score to determine the costs of premiums.

The Role of Credit and the Cost for Coverage

While one’s credit score may seem to be somewhat disconnected from the need for insurance, one’s credit score ultimately informs providers about each client’s history of general financial well being.  Factors that influence a credit score include:

  • History of opened accounts
  • Payment history (on time payments, occurrences of late payments, etc)
  • Ability to pay (at the least) minimum monthly balances on all due accounts
  • Income to debt ratio (essentially, is a client spending more money than he / she earns?)
  • Additional factors / economic habits

Essentially, by evaluating one’s credit score, an insurance provider can find out which clients are known to pay bills on time and which clients have histories of serious un-paid debts.  As a result, insurance providers can essentially “reward” those with a more positive financial record with greater savings.  Since individuals with a lower credit score may be more likely to repeat previous financial errors, insurance providers are accepting a greater risk by opting to offer coverage for clients with less consistent credit histories.  As such, the lower the score, the higher the premium.

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How Your Credit Score Impacts Insurance Rates

Tuesday, July 21st, 2009

While your credit score certainly impacts your ability to obtain a lower-interest loan, purchase a home, and the freedom make other large purchases, many individuals are surprised to learn that their credit scores also impact their ability to earn lower insurance premiums! As your credit score reveals your overall financial reliability, individuals with low credit scores are generally charged higher insurance rates. As an insurance company must ensure that they will receive their payments on time without any disruptions or delays, those with low credit scores are often at a disadvantage as they shop around for the best rates.

The Relationship Between Credit and Premiums

While each insurance policy type and company has its own fees and rates, most insurance programs allow for lower charges on higher credit scores due to the fact that a high credit score reveals a client who has proven his or her honesty, ability to pay bills in a timely manner, and overall financial responsibility.

Most notably, car insurance companies tend to alter one’s insurance costs in correlation with one’s credit score. In examining the relationship between, for example, car insurance and credit, insurance companies have discovered that individuals with lower credit are statistically more likely to be involved in an accident than individuals with higher credit. While there is no definitive explanation as to why lower credit drivers are statistically involved in more accidents some theorize that those with higher credit scores are potentially able to pay for minor damages out of pocket–without having to file an insurance claim. Ultimately, fewer anticipated accident claims leads to an overall drop in the cost of insurance coverage.

How to Boost Credit and Lower Premiums

If you’re striving to lower your higher insurance costs, one step involves boosting your overall credit score. Begin by ensuring that all of your payments are made on time to all of your creditors / accounts. Even one late bill can lead to a drop in your overall credit score! Adding to this, strive to establish and maintain long-term credit accounts. The longer an account is open, the more reliable you appear as a potential customer. This also means you should avoid opening too many promotional credit cards in order to receive a small discount-choose your credit accounts carefully!

Yet even with credit in mind, individuals desiring lower insurance rates should be aware that their overall credit score is just a fraction of what determines their insurance costs. Insurance providers also determine client costs by evaluating their driving history, tickets, traffic violations, and so forth. Ultimately, to save cash with decreased rates, ensure you’re carefully driving and carefully spending.

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4 Car Insurance Myths You May Not Know

Monday, May 25th, 2009

The methods of pricing car insurance can be like a cloak and dagger operation at times.  Each insurance company has their own statistical method for pricing their products.  But many people widely believe that insurance companies use some of the methods below to determine premiums.  However, you may be surprised to find out that these are simply myths and have no bearing on pricing at all.

Car Insurance Myth #1: The color of the car determines a portion of the premium.

Does the owner of a red Honda have to pay more than an owner of a white one?  No.  The color of an automobile is irrelevant.  What does matter is the automobile’s year, make, model, body type and engine size.

Car Insurance Myth #2: My credit score has no bearing on my premium

Not true.  Insurance companies are almost universally using one’s credit score as a factor in premium determination.  Your ability to continue paying loyally will help reduce your insurance costs.  However, late payments on your credit score can jack up your rates considerably.

Car Insurance Myth #3: No-Fault insurance only pays if I’m not at fault.

No-fault is widely misunderstood.  Many people believe that no-fault insurance will only pay if they are not at fault in an accident.  In actuality, no-fault is determined by state insurance laws, and means that the insurance will pay regardless of who is at fault in a no-fault state.

Car Insurance Myth #4: If my friend drives my car then his insurance is responsible in case of an accident.

Wrong.  Your car is your responsibility no matter who drives.  That means if your friend gets into an accident with another car and injures another person, your insurance company pays and your premium will be subsequently affected.

As you can see, there are many myths - most which need to be debunked. It is important to perform dilligent research to fully understand the elements of insurance, and it is our goal to aid you in this process.

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