You may be thinking that there is no connection between your personal credit score and your auto insurance premium. Well, unless you live in Hawaii, California, or Massachusetts, then you would be wrong, along with a lot of other auto insurance policyholders. So, in case you and a close friend were talking about your auto insurance rates, and you realized that your friend is paying significantly less although you have similar vehicles, driving records, and are close to the same age, then the difference in payment may be caused by your personal credit scores.
Every state except the three listed above will generate an auto insurance score that is based upon your age, driving record, type of vehicle, and personal credit score. This score will be used to determine if you qualify at all, and if so, what rate you will pay. Just like a conventional loan, this is done because research has shown that people with better personal credit scores are less likely to file an auto insurance claim.
Tips To Maintain A Good Credit Score
Pay On Time
- One of the best ways to maintain a high average credit score, which is often referred to as a FICO score, is to make sure that your bills are paid on time. Certain types of bills that are reported to the credit bureaus, such as a mortgage, mobile phone, and credit cards. These types of accounts will report to your credit company every 30 days with information about your payment history.
Keep Your Revolving Balances Low
- Your credit score will be at its highest if your balance on your revolving credit accounts remains below 30%. For example, if you have a $100 limit on a credit card, try to keep your used balance under $30 for the best results for your FICO score.
- Be sure to monitor your credit regularly. This will help let you know if you happen to forget to make a payment or if your score has suddenly changed. Also, this is a great way to help protect yourself against identity theft. One of the first things identity thieves will do is attempt to open new lines of credit. Most credit monitoring services will alert you immediately when a new account is opened or if a new inquiry is reported.
Get A Quote
There is no need to spend money if you do not need to. If you need auto insurance, contact Maryland Auto Insurance today for a no-hassle quote.