Many insurance companies use your credit score to determine whether to accept you as a policyholder and the rate you’ll pay. While credit score is only one of many elements that influence your rate, it can determine your premium. So how does your credit score affect your insurance rate?
How Does Insurance Affect Your Credit Score?
Your credit score will not be impacted if you pay your insurance premiums on time. However, you may experience a slight and temporary dip in your credit score if you apply for insurance because there will be multiple inquiries.
Therefore, getting an affordable insurance solution is essential because not paying your insurance premiums on time can impact your credit score. However, you’ll get a ding in your credit history when you’re late with your payments.\
How Does Your Credit Score Affect Your Insurance?
The credit score determines your likelihood of making an insurance claim. Statistics show that clients with higher credit scores are less likely to file claims, which means insurers are ready to offer better rates to people with better scores.
Customers who have low credit scores may be quoted higher rates. In some cases, they may have a hard time securing coverage. However, some larger insurance carriers may combine credit scores from different organizations and other customer data to create a special “insurance score.” This number is used like credit scores to determine a customer premium.