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Your Credit Score and Insurance Companies

By October 8, 2014May 21st, 2020Insurance


It can not be stressed enough how critical it is to maintain a high credit score.  Your good credit score it important not only for lending opportunities but also other cost-saving opportunities. 

Insurance companies derive an “insurance score” based on your credit score. It’s part of the process with out exception. Rest assured, however, it’s considered a “soft hit” and will not impact your credit score in the same way when trying to secure financing.

If your credit score is low, insurance companies views you as a poor risk when it comes to paying your bills on time. If you do not pay your bills on a timely basis, costs to maintain and administer an insurance policy becomes much more expensive to the insurance company. Insurance companies will charge you for this risk and some will decline to even provide a quote.

One way to prove  insurance companies wrong is to agree to set up your policy on an Electronic Funds Transfer (EFT) basis. This keeps your account current and in force. Credit bureaus like to see that you pay your bills on time. This will help to avoid blemishes for late payments as well as any potential collection agency issues.

But, we are not the expert in building credit or repairing credit and encourage you to ask the experts for advice. 

Here is a list, as provided by Experian, of items on a credit report and how long it could affect your credit:

1. Open accounts with no negative payment history: remain indefinitely as long as they are open and active.

2. Closed accounts with no negative payment history: remain 10 years from the date they are closed. Positive accounts remain on your credit report longer than negative accounts.

3. Late payments remain seven years from the original delinquency date. A single late payment is deleted at seven years. If there was a series of late payments (not paid at 30 days, or 60 days, or 90 days) and then brought current, the payments would be deleted seven years from the first one missed in the series. If the account was never brought current and charged off and placed for collection, the entire account will be deleted based on the date the account became late and was never again current. This is known as the original delinquency date.

4. Collection accounts remain seven years from the original delinquency date of the original account. Collection accounts are treated as a continuation of the original debt and are deleted at the same time.

5. Chapter 13 bankruptcy is deleted seven years from the filing date because at least a portion of the debt is repaid. Chapter 7 bankruptcy remains 10 years from the filing date because none of the debt is repaid.

6. Civil judgments remain seven years from the filing debt. A civil judgment is essentially a debt you owe through the court.

7. Unpaid tax liens remain 10 years from the filing date. Once paid, the lien will remain seven years from the paid date.

8. Inquiries: remain two years from the inquiry date. However, the impact of inquiries on credit scores is minimal and decreases rapidly.

There are several tips that could help you when trying to repair your credit. They include but are not limited to:

1. Pay down your credit cards.
2. Don’t carry big balances.
3. Reuse an older credit card to reflect the longevity of your credit history.
4. Dispute smaller or older negatives.
5. Eliminate significant errors listed on your report.
6. Add an installment loan (auto, mortgage loans) vs. revolving credit (credit card) to your financials to prove your reliability to pay bills.

We encourage you to  work with a professional if you need to pursue building or repairing your credit whether personally and/or for your business.