Understanding How Your Credit History May Affect Your Car Insurance Coverage

Many personal auto insurance companies consider your credit information when determining how much premium to charge for your insurance. So if you are calling around for new insurance, keep in mind that many insurers are looking at your credit history. I hope that we will be able to let you know why and how they do this.

The reason that some insurance companies use credit information is because they feel there is a direct correlation between consumer's credit history behaviors and expected claims that may occur. Therefore, they feel that people with better credit behavior are less likely to severe insurance losses.

Many insurance companies still use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance. Therefore, if you have not established a credit history yet, the companies that use credit history may not be best for you. They may not allow you to be eligible for certain discounts, which could result in higher premiums.

The companies that do use credit scoring will still use other factors in determining your premium. They will also use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance.

Is it fair for an insurance company even look at my credit information without my permission? The answer is yes. The Federal Fair credit-reporting act says "Reasonable procedures. It is the purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title." This can be found at http://www.ftc.gov/os/statutes/fcra.htm

If you feel that your credit history is better then the insurer can find, make sure the insurer has your correct name, address, social security number, and date of birth.

Some insurance companies will look directly at your actual credit reports when determining your rate, however most will use what is called an "insurance credit score." An insurance credit score is developed by using statistical techniques and methods to predict the likelihood a consumer will have a higher than anticipated losses. These are similar to what lenders use to predict the reliability of an applicant repaying a loan.

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. Notice that we call it an insurance credit score. This means that it encompasses many factors including credit.

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. If you report and error, the credit bureau must investigate the error and get back to you within 30 days. You can ask the credit bureau to send a notice of the correction to any creditor or insurer that has checked your file in the past six months. Once the errors are corrected, it is a good idea to get a new copy of your credit report several months later to make sure the wrong information has not been reported again.

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)

Tell your insurance company. Do not wait until the credit bureau investigates the errors to contact your insurer. Tell your insurance company right away and ask if the errors will make a difference in your insurance. If the errors are big, tell your insurer that you are disputing the information and ask if they will wait to use your credit information until the errors are corrected. Small errors may not have much affect on your insurance credit score. 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.

If you have taken the steps to improve your credit, score you should ask your insurance company to re-evaluate your credit score at renewal.

Visit http://www.carinsurance.com For Lowest Rates Available

Jon Register is a representative of CarInsurance.com. You can visit CarInsurance.com at http://www.carinsurance.com or contact them at 1-877-327-8728.

CarInsurance.com's online insurance marketplace gives an opportunity to consumers and to insurance companies. We offer the ability to shop for car insurance online.

Consumers can receive quotes from many insurance companies, in some states you are able to purchase your insurance instantly, online. You don't have to drive your car to buy car insurance. Buy online...anytime!

---

Disaster Decision - Do You Need Insurance?

The expenses involved with owning a home can be overwhelming at times - routine maintenance, repairs, seasonal preparations, improvements. Not to mention taxes, fees, and all those... Read More

What is Life Insurance?

Life Insurance is an insurance policy that provides an agreed amount of cover over an agreed term, so that should you die during the policy term, a... Read More

7 Sure-fire Ways of Reducing Your Home Insurance Premium

Home security improvement:All insurance companies will happily offer you a discount for burglar alarms and smoke detectors. Homes with fire and burglar alarms that communicate with a... Read More

Health Savings Account (HSA): Helpful for Older People?

The Health Savings Account (HSA) is an amazing tool that a lot of people have been talking about. It is meant to help you save money on... Read More

Choosing the Best Life Insurance Option for You

Life insurance in the UK is becoming more and more popular with many people now realizing the importance and the benefits of a good life insurance policy.... Read More

Online Insurance Quotes California Auto

Finding insurance quotes for California auto is now pretty easy. There was a time where finding auto insurance at a price we were willing to pay took... Read More

Long-Term Care Insurance: Eldercare Solution

When I suddenly had to become a fulltime caregiver to my elderly parents, both with health problems and starting to develop dementia (namely Alzheimer's), I had never... Read More

Entrepreneurs, Fill in the Gaps of Your Homeowners Policy

Business Owners Policies for the Self-EmployedWho needs a business owner's policy?Simple, anyone that runs a business from their home should have one. A comprehensive coverage homeowner's policy... Read More

The Need For Life Insurance

A person needs to reexamine their life insurance needs every few years because as our life events change so do our needs.When starting a family, a person... Read More

10 Tips to Save on Healthcare Insurance

Americans shopping for their own healthcare insurance can substantially cut premiums by following 10 simple steps, according to leading insurers.Answer Financial Inc. (http://www.answerfinancial.com), cites the following cost-saving... Read More

Underwriting Life Insurance For Diabetics and Diabetic Life Insurance Information

Life Insurance Companies differ in their "underwriting philosophy" when it comes to diabetes. Offering life insurance for diabetics can be risky if the underwriters are not fully... Read More

The Life Insurance Policy and What You Need to Know Before You Buy

Are you looking to buy a life insurance policy? Well, be careful. Life insurance can be difficult to understand and it's easy to be conned into buying... Read More

Why Buy Life Insurance?

Love. Yes, that's right. Love for your spouse, children, family, or even your school. This insurance provides financial protection for your family and friends when you die.... Read More

Do You Pay Too Much For Your Car Insurance?

Do the premiums just seem to get higher and higher every year?It is amazing how many people just receive their insurance renewal when it is sent out... Read More

How Much Renters Insurance Do I Need?

When obtaining renter's insurance it is important to put serious consideration into how much insurance you really need to buy. Some things you may want to consider... Read More

Buildings Insurance and the Threat of Flood

What is the impact of increased flooding risk in the UK? What happens if your home becomes effected by flood?Flood is an increased problem in the UK.... Read More

Terrorism Insurance - What it Costs Small Business

The Terrorism Insurance Act of Nov. 26, 2002. This helps businesses who must have insurance from being denied, which would kill those businesses. Our General Liability Insurance... Read More

Finding California Truck Insurance

It's very easy to find California truck insurance on the internet today. No longer does your search require numerous phone calls, faxes, brochures, going to the office... Read More

Long Term Care Insurance How Much Should I Buy?

Long-term care insurance policies have a variety of features and it pays to shop around. It is quite easy in the final years of your life to... Read More

What To Do When You Suffer An Injury On The Job?

For over 30 years I have been representing injured workers in workers compensation proceedings and there are some basic errors that injured workers make time and time... Read More

How Much Car Insurance Should You Buy?

Car insurance is one of the most dreaded chunks in your budget. And depending on which state you live in, it could be a smaller or larger... Read More

What Are The Auto Liability Insurance State Minimums For My State?

As you shop online for the best auto insurance deals you may begin to ask yourself what exactly is required by law when it comes to auto... Read More

Health Savings Account (HSA): Useful for Women in Childbearing Years?

The Health Savings Account (HSA) is an amazing tool that a lot of people have been talking about. It is meant to help you save money on... Read More

Insurance Credit Scoring: An Ethical Issue

The issue at hand is the use of a consumer's credit score as an underwriting tool for auto insurance rates. What is a credit score or FICO... Read More

What Answers To Questions For A Home Insurance Price Quote Will I Need To Know?

Lets face it, finding the best home insurance price quote can be an aggravating task if you're not fully prepared with answers to the common questions that... Read More

Reducing Soaring Insurance Claim Costs

With the soaring rise in claims to insurers from their customers, millions of pounds are being lost on a day to day basis throughout the industry in... Read More