How Your Credit History Can Affect Your Insurance Premiums

Consider this: if you have a bad credit history you’ll be paying more for your insurance premiums than if you have a good credit history.

Why? – because a bad credit history is evidence that you are reckless and have money worries; and if you have money worries then there is an increased risk you’ll make a claim on your insurance policy

QED - if you have a bad credit history you’ll be paying more for your insurance premiums than id you have a good credit history!

So , if you do happen to have a bad credit history , how can you get away from these higher insurance rates? And the answer is that there is only one way to do this, and that is to pay your insurance premium as a lump-sum amount each year, rather than electing to pay for your insurance premium as a periodic monthly payment. Why should this be the case? – well, again, if you elect to pay monthly then your insurance provider is going to consider you a bigger risk as they have a greater level of exposure than would be the case if you pay the entire premium up front. Look at differently, what this means is that the insurance provider will consider the first three-quarters of your policy term as extended risk factor if you pay monthly, rather than as one lump-sum premium; as , not only will they considered the risk of claiming on your insurance being higher , they’ll a l so take into be consideration that there is an extended risk that you’ll not make your next premium payment.

Aside from agreeing to pay for your insurance premium as a lump sum you really only have 2 other options: (1) fix your credit history; or (2) look for cheaper insurance with an alternative insurance provider.

Should you wish to look for cheaper insurance with an alternative insurance provider then the following are considered the standard ‘5’ considerations to take into account:

1. make sure the insurance company has a web-site and if it does not then don’t use it!

2. make sure the insurance company is rated by at least one financial rating agency - such as Moody’s. Again, if it is not, then don’t use it.

3. make sure the insurance company is a member of some government list. To do this, checkout the government’s department of insurance web - site , and if your prospective insurance company is not listed, don’t use it!

4. make sure that your chosen insurance company doesn’t share a similar name to that of a more famous insurance company. If it does, then it is likely that it is trading on its namesake’s name and you may well find that they’re not bona fide.

5. research consumer articles about the insurance company. To do this simply, checkout the consumer advice columns on the Internet for good and bad feedback.

So, you should now know that your credit history will affect your premiums and you can reduce these premiums if you do happen to have a bad credit rating.

 

 

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