You’re probably well aware by now, that your credit score will influence what kind and how much of a mortgage you can afford. But, did you know your credit score can also affect your home and auto insurance?
That’s right. Just as mortgage companies evaluate your credit history to determine whether or not you’re considered high or low risk, insurers look at the same thing for the same reasons. Studies have shown that financial history is a good predictor of insurance claims. The reasoning goes that the more delinquent the credit history, the more likely claims are filed, thus raising the costs. While this may be an arguable line of reasoning, and many experts cannot even explain why the numbers predict the way they do, it is a part of the underwriting process.
One of my associates from Trident Mortgage, Carl Hinds, shared with me very sound advice for achieving and maintaining good credit scores:
• Pay your bills on time.
• Don’t have more credit floating around than you need.
• Keep credit card balances low. Try to pay off the balances each month.
• Check your credit score regularly.
Remember that the underwriters of any insurance policy are also going to be looking at the age of the house, the roof, the type of construction, prior damages, etc. Credit score is just one component, but it does have a significant impact on how much you may pay.
For more information, contact me at 856-795-4709 or Carl Hinds, Trident Insurance at 856-857-2863.