In recent years insurance companies began to use a persons credit score to be a large determining factor in their auto insurance policy. It is believed that people with lower scores would cost the company more money. While there is no actual facts behind this mode of thinking it is, however, the current state of affairs.
It is believed that a low credit score is equal to someone who is irresponsible. Irresponsibility leads to accidents. Accidents cost money. The train of thought is quite that simple. So insurers check your credit history and will determine your policy cost, and if you finance that cost, the amount of interest you pay on the policy based on your credit score. So what can you do?
Starting 2-3 months before you renew or look for a new policy begin a personal credit evaluation. You can boost your credit score by following a few simple tricks, but you need a minimum of 2 months to see any real improvement on your credit report.
Begin with making sure for that 60 day period not a single payment is made late to any of your creditors. Two consecutive months of ontime paymnts will boost your score. This can be done easier if you put as many of your bills on automatic pay and just let them withdraw the payments 2 days before they are due.
Next, you will need to get a copy of your credit report from all 3 credit bureaus. It is a proven fact that nearly 80% of all credit reports contain errors. When you get your reports, go over them very carefully. They will have the accounts listed as adverse or good. Review why any are bad and if you find any mistakes, dispute them. These mistakes can be as simple as amount owed on a bill to payments that were recorded late, but were made on time. Each report will be different so you need to check each one. Once you have disputed any inaccuracies the credit bureaus have 30 days to reply or remove the entries. Once the items are removed your credit score will rise.
Finally, do not apply for any credit for 60 days. Each time you apply for credit your score goes down. If you apply for credit more than 3 times in a 30 day period, your credit score drops a lot.
Following these few simple rules will boost your credit score and help you find much better rates on your car insuirance.
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