Do you have bad credit? If so, it’s unlikely to get around the fact that it’s going to impact more than just your ability to get credit cards. Your credit history offers potential employers, banks and even auto insurance companies a snapshot of how safe or risky you are to employ, rent to or insure.
In fact, did you know your credit history is probably one of the most important factors taken into consideration by insurance companies when they offer you a car insurance policy?. This thorough record of all your financial data is analyzed and used to determine an insurance score, which is used to predict the level of future insurance claims you may have.
Your credit history contains information that has proven effective in predicting insurance losses, including:
* Your payment history: Have you made late payments or missed a payment?
* Length of credit history: How long have you been using credit?
* Your current balance on each account compared to your highest balance: For example, if you had high credit card balances before, are they lower now?
* Number of credit accounts: How many accounts do you have? This may include credit card accounts or installment loans.
* Credit inquiries: How often have lenders made inquiries into your credit report? This does not include “soft inquiries,” such as when a company reviews your credit report to make a promotional offer. (Credit inquiries are not used in all states.)
* Bankruptcies, foreclosures and other collection activity (Bankruptcy information is not used in all states.)
If you have bad credit, now you know why car insurance is so expensive. But the good news is that if you take steps to repair the damage to your credit report, and manage to avoid getting tickets or having accidents while you’re doing so, it won’t be long before your rates go down.
Courtesy of ARAcontent
