Credit History Factors and Car Insurance Rates
Insurance companies use many factors in determining your credit score. Here are some examples of those factors:
. Public records: bankruptcy, collections, foreclosures, liens, charge-offs, etc.
. Past payment history: the number and frequency of late payments and the days between the due date
and late payment date.
. Length of credit history: the amount of time you have been in the credit system.
. Inquiries for credit: the number of times you have recently applied for new credit, including mortgage
loans, utility accounts, and credit card accounts.
. Number of open lines of credit: the number of credit cards, whether you use them or not.
. Type of credit in use: major credit cards, store credit cards, finance company loans, etc.
. Unused credit: how much you owe compared to how much credit is available to you.
Your insurance credit score may differ from company to company, as they will use different factors in determining your premium.
Since each insurance company uses different techniques to determine your credit score it is hard to tell you what a good credit score is. Usually a good credit score will result in lower premiums.
Your agent or company is not obligated to tell you your credit score. In fact, they might not even know what it is. All they usually know is that your credit score qualifies you for a specific rate or policy. Some companies also offer better rates under each qualifying tier.
If you feel that there is incorrect information on your credit report, you should tell the credit bureau. The three national credit bureaus are:
. Trans Union (www.transunion.com or 800-888-4213)
. Equifax (www.credit.equifax.com or 800-685-1111)
. Experian (www.experian.com or 888-397-3742)
Also, tell your insurance company. Do not wait until the credit bureau investigates the errors to contact your insurer. If the errors are big, it can make a significant difference in your premium. Some companies are unable to adjust the premiums until the score is corrected, but it does not hurt to ask.