With a solid credit rating in hot markets like
While insurance represents only about 5 to 7 percent of a typical housing payment, when you're buying a home, you want to save wherever you can. Many insurance companies give discounts on homeowners policies for those with good credit. (See How to Save Money on
Credit Scores vs Insurance Scores
Insurance scores and credit scores differ. Credit scores predict credit delinquency while insurance scores predict insurance losses. Both are calculated from information in a credit report, such as outstanding debt, bankruptcies, length of credit history, collections, new applications for credit, number of credit accounts in use, and timeliness of debt repayment. Insurers or scoring agencies then calculate the insurance or credit score by assigning differing weights to the favorable or unfavorable information in the credit report. Information such as income, ethnic group, age, gender, disability, religion, address, marital status and nationality are not considered when calculating an insurance score.
Credit and insurance scores measure how well individuals manage their money--not how much money they make. And actuarial studies show that how a person manages his or her financial affairs is a good predictor of insurance claims. Statistically, people with a low insurance score are more likely to file a claim.
The good news is, most people have good credit and most people will pay less for insurance than they would if insurance scores weren't considered.
How to Build and Maintain a Good Credit History
1. Pay bills on time. The best way to build a solid credit score is to make
a habit of always paying your bills on time in full each month. Your goal
should be to build a long history of reliable bill paying behavior.
2. Limit the number of credit cards. Have no more than three or four credit
cards and hold on to them for a long period of time.
3. Keep balances low and use no more than 30 percent your available credit.
This, of course, means resisting the temptation to accept pre-approved
card offers in the mail or retail credit cards even though there may be a
discount available for opening a new account.
4. Check your credit report annually. Look for errors and correct them as
soon as possible. By law, you are entitled to one free credit report from
each of the three reporting agencies once a year. Go to www.myfico.com
Keywords for this news article include: Homeowners, Real Estate,
Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC
Most Popular Stories
- Businesses, Investors Pressing for Green Policy
- Who's Next? More Nude Celeb Pics Hacked, Leaked
- Tips for Hiding, Securing Data on Smartphones
- Hispanic Enterprises Drive U.S. Economy
- Fed in No Rush to Raise Interest Rates
- ISIS Calls for Jihad Against 'Filthy French'
- Would You Trade Privacy for Job Security?
- Lower Used-Car Prices Roil the Auto Industry
- Cristela Gets a Big Thumbs Up
- Iran Says Syria Strikes Illegal