Did you know that your credit rating can have an effect on the insurance rates that you pay?  It’s true!  Many insurance companies will take a look at your credit history in order to determine whether or not you are a higher risk.  While many experts do not agree that there is a connection between poor credit and poor history, many insurance companies still believe that there is.  Therefore, in order to make sure you get the lowest insurance rates possible, it is a good idea to take some steps to clean up your credit and increase your credit rating.

Paying Your Bills On Time

The most obvious way to increase your credit score is to make sure you pay your bills on time.  Even being late by just a few weeks with only one company can really hurt your credit rating.  If you are running into financial difficulties and won’t be able to make your payment on time, resist the temptation to ignore your creditors.  Rather, call your creditors ahead of time and try to make new payment arrangements.  Many companies are willing to work out a new payment schedule with those customers that make an effort to get their bills paid.  Not only will this help you get through you bad financial situation, it will also prevent your credit rating from getting hurt further.

Use Your Credit Cards

Many people don’t realize that it is actually beneficial to use your credit cards.  The more you use your credit cards and repay the debt, the more you establish that you are responsible with your finances.  The trick to using your credit cards more often, however, is that you need to make certain you pay your bill off in full each month.  Otherwise, you will pay hefty interest charges and you will actually hurt your credit if you carry a balance on your credit card.  Look at your normal monthly expenditures, such as your phone bill, and see if you can have them automatically paid with your credit card.  You may actually find it to be easier to get your bills paid on time if you have them all charged to your credit card and you simply write one check for them all at the end of the month.

Reduce Your Debt

The more debt you are in, the worse your credit rating can become.  This is particularly true if you have all of your lines of credit maxed out.  It is actually better to have $5000 worth of credit card debt spread out on three different cards than to have it all on one cards.  This way, your credit to debt ratio on each card is reduced and you appear to be less of a risk.

By following these simple steps, you can improve your credit score and you just might find that your insurance rates will go down!

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