Keeping ‘score’ of your credit can affect your insurance prices Did you know your credit history can affect your insurance premium? Insurance companies use myriad criteria when they screen potential customers to determine their policy prices and, while it’s not the sole item, credit history certainly is one of them.
While it is unlikely that any single action you can take will affect your score or insurance premiums immediately, you can improve your future credit score over time. But, there are things you can do now to improve them in the future. These include:
• pay your bills on time; delinquent payments and collections can have a major negative impact on your score;
• pay down your balances; high outstanding debt can affect your score; and
• apply for new credit sparingly.
Each time a credit score is calculated, specific reasons are delivered along with the score. You should check your credit history every year. Once you have received your score, you can ask for the reasons that came back with your score. These reasons, which are listed in order of importance, represent why your score was not higher. Addressing them is likely to result in an improvement in your score.
Payment of overdue bills in full does not remove your payment history, but over time information can improve and issues that have been addressed will eventually pass. The length of time such information remains on your credit file is as follows:
• credit and collection accounts—seven years from date of last activity;
• courthouse records (judgments, liens and bankruptcies)—seven years from the date filed; Chapters 7 and 11 remain on file for 10 years from date filed;
• satisfied judgments—five years from date filed; and
• paid collections—five years from the date of last activity with original creditor.
If you find errors on your credit report, make sure you contact the major credit bureaus and tell them about the mistakes. The three major reporting companies: Equifax (800) 685-1111, Trans Union (800) 916-8800 and Experian (888) 397-3742, all have procedures for correcting information promptly.
You are entitled to have incomplete or inaccurate information corrected without charge. The credit bureau must reinvestigate within a “reasonable period of time” if there is a dispute, unless the dispute is “frivolous or irrelevant.” If the disputed item cannot be verified, the credit bureau must delete it. If it is incomplete, they must complete it. Also, at your request, the credit bureau must send a notice of the correction to any creditor who has checked your file in the past six months, and you are permitted to file a statement of explanation if the reinvestigation does not resolve the dispute.
Remember, you have power to affect your policy. Paying your bills promptly and making sure your credit report is accurate is one way to do it.