Your credit score has the ability to help you and hurt you when it comes to many purchases. Including your insurance. Did you know that companies could take this rating into account when determining your auto insurance costs, as well as your homeowners’ insurance premium? While not allowed in every state, in Maryland a poor credit score could cost you up to 40% more—with some limitations, of course.
How to Check Your Credit Score
Fortunately, this is the easy part. For many people, getting your credit score is as simple as logging online. A number of credit card companies provide up-to-the-minute credit reports as a free benefit of using their services. You should also be able to access this financial rating through your auto or home loan provider. If you’re currently debt-free and trying to stay that way, then connect with a local non-profit counselor who can help. You can find a list of approved options here. At this point, you have so many resources to obtain this information, you shouldn’t need to subscribe to a credit score service or pay for it!
What Do We Do with It?
Now, that’s a good question. When it comes to insurance, we don’t use your credit score in quite the way you might expect. Typically, this numerical rating (somewhere between 300 and 850) tells companies how financially risky you are. Pretty much any score above 700 indicates you have good credit, but we’re less concerned with the number itself than we are with what’s behind it.
Only certain factors can be used to affect your insurance costs. For example, a history of bankruptcies or late payments may cause you to pay a higher premium than your neighbor. Even the number of credit cards you have factors in. But we can’t just look at your credit score and base your pricing on that—not without these additional details.
What If My Credit Score Changes?
That’s bound to happen—both for better and for worse. The good news is that you can ask us to doublecheck your credit score once each policy period (which usually lasts for 6 months). If your score has improved, then your policy premium could decrease during your next renewal. Fortunately, a poorer score can’t be used against you to further increase your insurance costs.
It definitely pays to be aware of your credit score and work to actively improve it. Not only will this help you save money on your auto insurance and homeowners’ insurance, but it also determines your interest rates for all sorts of financial undertakings in the future! If you have additional questions on how your credit score relates to your insurance—or just your coverage in general—the team at Freedom Insurance Agency is always here to assist you!