A good credit score is extremely crucial is getting an insurance policy and securing a good premium on the same. However, it’s not only the interest rate that gets affected, but also impinges that the credit rating will have on home insurance premium. In contradiction to what you have heard about the same, credit score certainly, has a direct impact on the premium you pay for home insurance.
According to Property Causality 360:
- People with poor credit history pay 91% more premium when compared to those with a good score.
- People with an average history end up paying 30% more premium.
- It is to be noted that the FICO score is used by 85% of the home insurance providers to analyse the creditworthiness of the applicant.
In contradiction to the above facts, the other specifics that will have an impact on the premium amount are:
- Crime rate
- Other facilities like water, sanitary, etc.
However, it is unreasonable to conclude that a person with an excellent score will also a heavy pocket. There is every possibility that the person played smart and was successful in attaining and maintaining an excellent score.
So, why is it that your credit score is given so much weight age while you are shopping for home insurance?
The simple answer is that the creditors feel that credit score is a decent and an authentic predictor of risk. Hence, it is taken for granted that applicants with a poor score are more likely to file a claim when compared to the ones with a decent or an excellent credit score. For people in business, it certainly doesn’t matter whether this gauging criterion is fair or not. For them, the most crucial things are the facts and the figures provided by authoritative bodies like FICO, CIBIL, etc.
Hence to enjoy all the eye-catching benefits offered by the banks, insurance companies, etc. one certainly will have to work for an excellent credit score. Here are few tips which will help:
- Ensure that you pay your bills on time because this accounts for 35% on your credit report.
- Do clear your debts on time so that it does not bring down your credit score.
- Make it a habit to check your credit report periodically so that you can identify errors and rectify them on time.
- Act smart! Don’t ever think that by closing a paid off account you can boost your score. In fact, by closing an account you are reducing your total credit allotment. Conversely, it’s not wise to open new account especially if you add debts to the same account.
To conclude, we can say that working for a good score is a perplexing task. One needs to be very smart and canny in attaining the same. However, these days all services are just a click away. Browse the net for more information on the same.