Your credit history is not only crucial for obtaining loans or credit cards but also for your insurance. Insurance companies evaluate your credit profile to determine your premiums and renewals.
Your credit score, established by agencies like TransUnion and Equifax, is influenced by various factors such as timely payments and levels of debt. This score is used by lenders to assess your ability to repay debts.
However, your insurance score, based on your credit, differs slightly. Insurers calculate it by considering various elements to estimate your propensity to file a claim. This score can influence your ability to obtain coverage, your premiums, and even the renewal or cancellation of your policy.
For example, if your credit report shows late payments or high debt levels, your insurance score will likely be low, placing you in a higher risk category for the insurer.
Improving your credit score can also enhance your insurance score. By working on aspects like on-time payments and credit utilization, you can see improvements.
Before renewing your insurance, discuss with your broker to understand how your insurance score influences your overall finances.
