Many insurance carriers check credit standing when you apply for coverage. Three national companies gather your credit information and develop a score. Most insurance carriers and surety companies access that information to see how well you handle your financial affairs. If you have a high ("good") credit score, insurance companies are willing to offer you better prices. If you have a low ("poor") credit score, companies may raise the cost of your insurance or even refuse to insure you.

Do the insurance companies we represent use credit scoring?

Of the companies we currently write auto insurance through, only three do not check credit. Those that do not are Workmen's Auto, Pacific Star and Southern Insurance Company.

If you have poor credit, what can you do?

Poor credit works against you financially in many ways, not just with insurance. The following suggestions, found by searching around the internet a little, may help you improve your credit.

  • Pay your bills at the time you receive them, not weeks or months later. Missing payments for just one month can knock your score down 100 to 200 points.
  • If you have credit cards, do not max them out. It is good to have several cards that are paid regularly and on time. Keep your credit card balances at less than 25% of the card limits.
  • If you have unused credit cards with no balances on them, don't close them out. Those cards work for you. They show you using 0% of your card limits, which increases your overall score. You can destroy the cards so you can't use them, just don't close the accounts.
  • If you want to cancel some cards, cancel those that are the newest, less than a year old. You want to keep the long-term ones because they provide evidence about the history of your credit.
  • Ask your current credit card companies to increase your spending limit. This improves your score. You don't need to use the higher limit; just have it available.
  • Don't add new credit or credit cards unless you absolutely need to.
  • Don't declare bankruptcy if you can help it. It wreaks havoc with your credit for up to ten years.
  • Obtain your credit report. It is a federal law that you are entitled to a free annual credit report. You may obtain your report through annualcreditreport.com.
  • Put as many of your bills as possible on automatic bank withdrawal. That way they are automatically paid on time.
  • Pay others online, with the online program reminding you when the bill is normally to be paid.
  • If you don't use a bank or credit cards, but pay everything with cash, you may not have a verifiable credit history. Even if you don't like them, you need to have a checking account and some credit cards to establish credit history. 15% of your credit score depends on your credit history through these sources.
  • Spread out big item purchases. Several really big purchases in a short period of time push your score down. Wait six months to a year before the next big purchase to allow your credit score to rise back up from the last big purchase.

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Questions?

If you have questions concerning this information, please call us at 503-620-0230, or come in.

Llámenos ya al 503-620-0230.