Q&A: Improving Credit

Insurance companies use many factors when determining whether to accept a customer and how much his or her insurance should cost, including the use of credit information for insurance risk assessment. As a result, improving your credit can have an effect on your insurance premiums.

How do I find my credit report?

It is recommended that consumers check their credit report each year to verify its accuracy. You can order your report from the credit bureaus (for a small fee) at any time). If you are denied credit, insurance or any other service based on information in your credit report, you are entitled to a free copy that report within 30 days. Below are toll-free numbers, addresses and Web sites for the three main credit reporting agencies:

What if there’s an error on my report?

The report you receive should include instructions on disputing a mistake on your credit report. Essentially, you need to provide a written explanation of the disputed entry, and mail it to the appropriate credit agency. Remember, once you initiate the dispute resolution process with the credit agency, they must respond to you within 30 days.

How can I improve my credit-based insurance score?

• Don’t open too many credit accounts, and keep balances low. Open card accounts that haven’t been used indicate you could take on extra debt quickly.
• Pay bills on time. Don’t even allow a 30 day late notice to appear; that can affect your credit history and ultimately your insurance score.
• Check your credit report (see above). Mistakes in your report could be affecting your credit history and ultimately your insurance score.

How long does credit information stay on my record?

After seven years, most negative information such as late payments, accounts your lender turned over to a collection agency, and court judgments against you is removed from your credit report. Bankruptcy information remains on your report for ten years. However, recent information is usually factored more heavily, especially the last two years.

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