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Higher Insurance Premiums and Bad Credit
If you have bad credit the chances are that you're probably paying
a whole lot more for your car insurance than people with better
credit ratings. Auto insurance companies are using the credit
information of individuals in order to determine the
susceptibility of people to becoming risks in terms of their
ability to pay debts. This means that you have a lot more people
paying substantially more for car insurance than they ordinarily
should.
What's An Insurance Risk Score? Insurance risk scores are
calculated from a number of things which are used to determine the
stability of an individual. When insurance companies use credit
scores to determine insurance risk, they care about various things
such as how regularly people pay their bills and how much they may
owe. It is also used to identify customers that are responsible
and reliable at the same time. Insurance companies have paid for
studies which have which show that the more responsible a person
is with their bills; the more responsible that they will be with
their cars and the less likely they are to cause accidents. These
studies have shown a direct correlation between people who have
high credit scores and low insurance claims.
Certain companies and their agents aren't using these credit
scores to determine insurance rates but the eligibility of people
for insurance. If you want to find out how your insurance company
is making use of your credit information to determine your
insurance rates, you should try contacting your agent.
How Is Credit History Used To Determine Insurance Risk? Insurance
establishments will look for certain things on a persons credit
score in order to determine whether they are an insurance risk or
not. These things are:
1. Past payment history - Does the person in question pay their
bills regularly or not? Have they ever had liens placed against
them or claimed bankruptcy? All these things may end up affecting
your insurance scores.
2. Amount of credit owed. How many accounts does a person have?
How close are these people to their credit limits and what sort of
accounts are these accounts?
3. How long is their credit history? This fact looks at how a long
a persons credit history is and what specific accounts do they
have?
4. New credit. This fact looks at the number of accounts that he
has and the way they were established.
5. Types of credit. Does the person in question have outstanding
credit cars, store credit, home loans and school loans?
The basic thing is that auto insurers are looking for things other
than your driving record in order to determine the sort of person
that you are. They want to see the different things that show how
stable and how responsible a person is. By doing this they hope to
get a person who has fewer accidents, less claims and lesser costs
for their company over the duration of their coverage. This means
profit for them and lowr insurance costs for the person that is
being covered.
Article
Source:
http://www.creditwebsite.net |
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