How Your Credit Score Affects Your Ratings
Your credit score has a major impact on your life, and although you might think to yourself that you don’t have the need to make credit, apply for a loan, or qualify for something that requires you to have a perfect credit score, there are many ways that it can affect your entire life, especially when it comes to certain aspects thereof, such as your finances.
Credit scores affect everything as important as purchasing a car, applying for new credit lines, qualifying for a loan, as well as your mortgage.
One of the things it also affects the most is your insurance premiums. Depending on how high or low it is, you might have increased or decreased rates.
It’s quite simple to understand. If you have a bad credit score, your premiums will increase, due to the risk that the probability of a claim being filed against you, would be more likely.
Those who have a good credit score, on the other hand, are perceived as individuals that are much less likely to file a claim, which means they will receive far lower rates.
Given the fact that some countries, such as South Africa, have an increased number of residents that have or obtain a low credit score, annually, it’s quite understandable as to why South Africans aren’t very happy about insurance companies screening their credit, to begin with.
Although not all insurance companies request your consent to view your credit score if you do not give your consent to go forward if they do ask, your credit score might decrease even more.
How Your Credit Score Affects Different Types of Insurance
Car Insurance – Depending on the value of your car, or your payment terms, a lot of car insurance companies might skip your credit check, but there’s still a chance that they will have a look at it, especially if you require a higher premium plan.
Home Insurance – Your credit score plays a big role in whether you’ll be able to both purchase or lease a house, as well as getting it insured. Your credit score will determine whether you qualify for home insurance, as a higher credit score puts you in the position less likely to claim.
Claims – It’s important to know that when it comes to claims, insurance companies are not allowed to run your credit score whatsoever. Especially not without your consent, as this can place them in trouble with the country’s regulators.
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