How Your Credit Score Affects Your Insurance Rates

Your credit score doesn’t just impact your ability to get a loan or a credit card—it can also influence your insurance rates. Many insurance companies use credit-based insurance scores to help determine the premiums you’ll pay for auto, home and even renters insurance. Understanding how your credit score affects these costs can help you take steps to secure better rates.

Why Insurance Companies Use Credit Scores

Insurance providers use credit-based scores because research shows a correlation between credit history and the likelihood of filing claims. Statistics suggest that individuals with lower credit scores tend to file more claims, leading insurers to charge higher premiums as a precaution. Conversely, those with higher credit-scores are viewed as lower-risk policyholders and often receive lower rates.

How Your Credit Score Impacts Premiums

A lower credit score can increase your insurance rates by a significant margin. Some studies indicate that policyholders with poor credit pay up to 50% more—or even double—than those with excellent credit pay. The difference can be even more substantial for auto insurance, where poor credit can mean paying hundreds more per year.

On the other hand, a strong credit-score can help you qualify for discounts and lower rates. Insurers see responsible credit management as a sign of financial responsibility, which translates to lower perceived risk.

Improving Your Credit Score to Lower Insurance Costs

If your credit-score is negatively impacting your insurance rates, consider taking steps to improve it:

• Pay bills on time to establish a solid payment history.
• Reduce credit card balances to improve your credit utilization ratio.
• Regularly check your credit report for errors and dispute inaccuracies.

Improving your credit-score can lower Oregon insurance premiums, save money, and enhance your financial health.

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