Credit Scores and Homeowner Insurance
Your credit score seems to follow you wherever you go, doesn’t it? Everyone wants to know what it is. You may have gotten a break on your car insurance because you had a high score and your employer probably examined it before he or she hired you. But did you know it can affect your Miami home insurance, too?
Risk Factors and Premiums
Believe it or not, your credit score tells more about you than how much debt your have or if you make your payments on time. At least, it does to insurance companies. They have found that people who are not consistent in their payment histories are more likely to make a claim than people who always pay on time.
When you think about it, it does make sense. Those who don’t consider their financial obligations their first priority are often those who are thoughtless or irresponsible when it comes to personal or public safety. They are, in general, the ones most likely to be careless in other areas of life and that puts them at risk for injury, illness or damage to their homes.
You Can Avoid Credit Score
Fallout When an insurance company is considering an applicant, they assign them a score that consists of your credit information and other factors to predict how likely you are to make a claim in the future. Those with lower credit scores are more likely to collect from the insurance company than those with a high score.
If you already have a homeowner’s policy but want to shop around for better rates, check your credit score first. Correct any mistakes that are listed before you apply for a quote. If you are beginning to feel you may get behind in your payments, restructure your budget and make them your first priority. If you are already behind, catch up and begin making extra payments specifically on the principal to reduce your debt-to-earning ratio.
Advantages of the Scoring System
The news is not all bad; quite the contrary. Scores based on consumers’ credit scores encourage competition between insurers and that means lower prices overall. If you have a good credit score, you’ll be able to get a lower premium due to your perceived trustworthiness. Knowing about this factor in calculating your premiums could also motivate you to improve a borderline score or change your spending habits to ultimately make an improvement in your financial health.
These scores do not contain information about your income, where you live, your marital status or your race. They also ignore nationality and age, making them blind scored based only on pertinent facts that are legal to obtain.
If this scoring system spurs you to improve your score, chances are your attitude towards finances will also change. You will become more orderly and detail oriented, too. Statistics show that those with good credit scores tend to want order in their lives and their homes, paying attention to routine maintenance that prevents losses.