by DanWilliams » Thu Dec 03, 2009 02:55 pm
For those of you who are constantly searching for that "holy grail" of cheap car insurance policies...a quick look in the mirror is a good start.
The majority of companies are using your credit score/profile as a means of determining an adequate price to charge you. Many companies have hundreds of pricing levels compared to a few years ago when they may have had four or five price points. Some carriers suggest that some day an individual rate will be applied to each individual.
You want a great rate just like I do. I've worked hard to protect my credit and pay my bills on time. That gets me a much bigger discount on my car insurance today than it did just five years ago.
Get a copy of your credit report. Close out accounts that are old and not used any longer. Clear up any mistakes with the vendor who provided any incorrect information. Start keeping current on accounts you may have been occasionally late with. I'd suggest that within a few short months you will see an improvement in your score. That small improvement may help you find that magical rate you've been hoping for.
The majority of companies are using your credit score/profile as a means of determining an adequate price to charge you. Many companies have hundreds of pricing levels compared to a few years ago when they may have had four or five price points. Some carriers suggest that some day an individual rate will be applied to each individual.
You want a great rate just like I do. I've worked hard to protect my credit and pay my bills on time. That gets me a much bigger discount on my car insurance today than it did just five years ago.
Get a copy of your credit report. Close out accounts that are old and not used any longer. Clear up any mistakes with the vendor who provided any incorrect information. Start keeping current on accounts you may have been occasionally late with. I'd suggest that within a few short months you will see an improvement in your score. That small improvement may help you find that magical rate you've been hoping for.
Posted: Fri Dec 11, 2009 01:10 am Post Subject:
Exactly, if your worried about your score-go ahead keep those accounts open. But paying down your debt doesn't make it higher-it gets lower until it reaches zero.I for one am going for a zero, and I will be there in about 2-3 years. When you close an account, it will just read "closed by account holder", the history of that account can still read as negative/positive. You must just decide how much of an importance a fico score is to you. The bottom line is, closing an account will not lower score enough to worry-no matter what they tell you. I have learned that I eventuall will not need or worry about my score in the future. I do plan on buying another home within a few years, but I also plan on having such a healthy down payment (approaching 25%) that I won't require a uber-high FICO to qualify for financing.
Posted: Fri Dec 11, 2009 06:10 pm Post Subject:
InsTeacher, Not trying to discredit your knowledge but your statements are not entirely correct. I don't think mine could be considered entirely correct when put under a microscope :wink: but "actual" credit scores Are used by several carriers in Pa for rating purposes in their tiering models. Also... "open accounts" are used by at least one other major carrier in the state and better tiering is achieved by those with fewer open accounts(irregardless of balances). So there is the conundrum...do you close accounts that are not likely to be used again? I say yes...you say no... If you follow my advice your insurance profile will improve with one major carrier(that I know of) and will not be affected negatively in the eyes of other carriers who use a more pure form of credit score. That is the option I feel comfortable with.
I certainly do not agree with credit being such a large determining factor in rating but it looks like it will take legislation to remove it.
Posted: Fri Dec 11, 2009 06:33 pm Post Subject:
Dan, I think that I may have not explained myself fully. I probably should have said instead that "credit scores are used in insurance rating as part of an insurer's 'insurance scoring model' but are not the only factors in determining insurability, rates or coverage availability."
Does that sound better?
InsTeacher 8)
Posted: Fri Dec 11, 2009 06:38 pm Post Subject:
I'd be 100% "on board" with that statement
Posted: Fri Dec 11, 2009 07:50 pm Post Subject:
:D
InsTeacher 8)
Posted: Mon Dec 21, 2009 11:23 pm Post Subject:
On a side note, the Texas Legislature did a study on the relationship between poor credit scores and claims' payouts. They found a relationship between claims' payments and poor credit ratings.
The study can be found at http://www.tdi.state.tx.us/reports/documents/creditall04.pdf
Posted: Wed Dec 23, 2009 12:30 am Post Subject:
The link to the Texas DOI's report on credit score usage is fascinating, assuming you can wade through the information and actually understand it. My assertion is that these data would more than likely be applicable in any jurisdiction.
Check out the report...it's interesting and absolutely shows a causal link between credit/insurance scoring and loss statistics.
InsTeacher 8)
Posted: Thu Dec 31, 2009 12:17 am Post Subject: What Affects Credit Scores?
There are a lot of people who look at your credit score before you can do any number of things. From taking out loans to renting an apartment, getting a job to getting car insurance. It is important to know what affects credit scores such as your credit card usage and debt. There is a wealth of information about fixing/improving your credit, reducing your debt, budgeting and much more at Credit-Advisors.com
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