Monday, June 16, 2008

Save Money On Car Insurance By Improving Your Credit Rating (Covered-car-transport)


If you are looking for ways to save money on car insurance, you might want to turn your attention toward your credit rating. Believe it or not, a poor credit rating can lead to higher insurance costs. Therefore, if you take steps to improve your credit rating, you may enjoy lower rates on your car insurance as well as on the interest on your loans.

Why Does My Credit Rating Impact My Car Insurance Premiums?

Although some states do not allow car insurance companies to access credit ratings in order to determine insurance rates, most states do allow this practice and many car companies use credit ratings as a factor for determining rates. According to the car insurance companies, a person’s credit score helps determine their level of responsibility. A person with a good credit rating is more likely to be a responsible driver than a person with a poor credit rating. Therefore, if you have a poor credit rating, you are considered to be a higher risk driver.

Improving Your Credit Score with Responsible Actions

In order to improve your credit score, it is important to be responsible with your finances. This means paying your bills on time and making certain to never exceed your credit limit on your credit card. Even one late payment can be devastating to your credit rating, so be certain to make your payments on time. If you think you will have trouble making a payment on time, contact the lending institution ahead of time and try to make alternative payment arrangements. Many companies are willing to work with customers that take the initiative to work out a payment plan.

Pay Down Your Debt for a Better Credit Rating

You can also improve your credit rating by paying down your debt. The more debt you have, the greater risk you become. In addition, try to spread your debt out onto multiple credit cards. Having $10,000 worth of debt spread out onto three cards is better than having one card maxed out with the full $10,000. This is because your credit to debt ratio is high on that card, which makes it look as if you are not taking responsibility with your credit.

Increase Your Credit Score with a Prepaid Credit Card

If your credit is in really bad shape, you can improve it by obtaining a secured credit card. A secured credit card is one that you send money to ahead of time. The amount of “credit” you have is determined by the amount of money you send to the card. Although this may seem like a complicated process, it is worth your time and effort if the activity is reported to the credit reporting bureaus. Make certain the card does report your activity, as some of these cards do not. You should also be aware that these cards often have high fees, but the cost will be worth it when you get your credit on track and enjoy savings on your car insurance and on your interest rates.

About the author:Shannon Kietzman is a freelance writer and an authority on car insurance issues, including methods for online auto insurance. She helps others learn the basics of car insurance so they can make proper and informed decisions when choosing the coverage that is right for them.