Improve Your Credit ScoreAuto insurance companies in most states use credit scores to determine the risk and provide car insurance rates. A good score could help reduce what you pay each month. People with good credit scores could save money; plus, it’s wise for many things to work to boost your credit score. But, how to do it? 

Key Ways to Boost Credit Scores

Before getting into the tips, find out where your credit is right now.  This is your first goal. You can request a free credit report from the credit bureaus (Experian®, TransUnion®, Equifax Inc.). There are free credit services that can also help you to determine what your score is. Once you know where you’re sitting, then, apply these tips:

#1: Make Every Payment on Time

The most important step in improving credit is to make consistent payments. Making payments every month before the due date helps ensure your creditors report your reliable payment history. To avoid missing a payment, set up automatic payments. Most lenders and insurance companies allow this. It applies the amount you want every month on a specific day automatically (some allow you to choose the date). Or, if you use debit cards, keep a notebook of when you paid each bill, each month.

#2: Avoid Applying for Too Much Credit

Applying for numerous loans and credit cards can lower your credit score. You might think you’re saving that 10% or whatever the store is offering but lenders think you’re desperate for credit. Instead, aim to apply for new loans only when completely necessary. They appear on your credit report as hard inquiries.

#3: Work to Pay Down What You Owe

Reducing your debt is important. Aim for owing no more than 30 percent of your balance on each account you have. To make this happen, consider these tips:

ü  Don’t use your credit cards for purchases. Instead, use a cash system to pay for your bills and to make purchases over the next month, or pay balances off each month.

ü  Make extra payments to your account. For example, if you receive a tax return, bonus, or a gift from someone, use it to pay down your credit.

ü  Aim to double, at least, the minimum payment owed. You may need to create a budget to help you do so, but only paying the minimum payment extends your debt for years.

Your car insurance company typically doesn’t run a full credit report and learn all the details about history. They want to know if you are a responsible borrower, if you’ve honored your commitments (such as finishing out previous policy terms, declared bankruptcy, etc.), and if you pay on time. As your credit score improves, it can help you secure a lower rate with a more preferred company.  It’s not an overnight, immediate response but boosting your credit score helps in many facets of life, including car insurance.


If you'd like help shopping for the best insurance rate, contact Solo Insurance online or at 800-207-7656.


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