If you are getting ready to purchase car insurance, consider looking at a copy of your credit report a month or so in advance. In most states, insurance companies are allowed to use your credit rating as part of the basis for determining your insurance rates. Insurance companies believe that a persons’ credit history is an indication of their ability to act in a responsible manner. Therefore, they feel that credit scores will help them weed out irresponsible drivers. For the consumer, this means that any errors or smears to your credit will make the price of your insurance go up, sometimes drastically.
Make sure you check your report at all three bureaus. There are several items on the report you will want to look for. Firstly, see if you have any outstanding bills on your report that you were unaware of. Pay them off if they are yours or make arrangements to pay with the company as soon as possible. Next, check to make sure that the information on your report is correct. The address, phone number, birth date and any names that you have used in the past should not include any errors. Look for any accounts that you don’t recognize which might indicate identity theft or other issues. Check the credit inquiries section of the report to see who has been viewing your information, and for what purpose. Then, correct any discrepancies through each of the three major credit bureaus. Each bureau will have a place on their website for addressing and correcting errors. In the event that you find evidence of identity theft, all three companies also offer information and resources to help you.
Finally, to really protect your credit and positively impact your insurance premiums, pay your bills on time every month. This will increase your credit score within 6 months and should decrease your insurance premiums the next time you have prices quoted. To further improve your credit and your premiums, avoid maxing out your credit cards. Try holding them to about twenty-five percent of their credit limit. Taking these steps can allow you to save hundreds of dollars on insurance premiums as you improve your score.