Credit Scoring

Thanks for sharing this!

Credit scores, which are calculated based on your history of making timely loan payments and other financial information, are used to assess your creditworthiness. Think of them as the adult version of your high school grade report, with similar pass/fail results. For instance, if you try to finance a car or apply for a mortgage, the lender will check your credit score before granting—or denying—credit.

You may already be familiar with credit scoring as it applies to loans. But did you know insurance companies might also review your score to determine if you’re a good risk for policies such as homeowners or personal auto? Along with other details, your score can affect the premiums you pay.

Example: Statistics show that single people, inexperienced drivers and men have more accidents. Combining these factors with a low credit score could trigger a higher auto insurance premium.

Some states have laws that affect how—or if— an insurance company can use your credit score. In Florida, for instance, insurance companies are not supposed to use your credit history against you if you are dealing with unexpected medical bills or the death of a spouse.

Other protections: Depending on where you live, companies may not be able to deny coverage due to an insufficient credit history. And insurers are typically required to inform you if your credit score has an adverse effect on your premium.

What should you do if you discover that’s happened? Take advantage of recent legislation and order a free copy of your credit report. Then make sure the information in the report is accurate. If it is, work on establishing a better credit score by reducing excess debt and making payments on time.

You might also like these posts

Article – Preparing for Hurricane Season Image source: By Nilfanion , via Wikimedia Commons. The map shows the tracks of all tropical cyclones which formed worldwide from 1985 to 2005.The Atlantic hurricane season begins June 1. While the 2014 season is expected to be a mild one, mild doesn’t mean storm-free. Getting ready early is a good idea—and early preparati...
Article — Locked Out Image source: UK, public domain, via Wikimedia Commons What’s on your computer? Your manuscripts? Work? Photos? What would you do if you were denied access to those files—if you were locked out by rogue hackers? If you’re shaking your head because you think nothing on your computer is of value to hackers, consider th...
Article — Tax Identity Theft Awareness Week Image source: Taxes are scary enough, without adding tax identity theft to the mix. The costs—$3.6 billion a year according to an estimate by the US Treasury Inspector General for Tax Administration—are scary, too. Unfortunately, both tax ID theft and the costs are on the rise. The US Federal Trade Commission...
Article — Your 2013 Federal Income Tax Return Image source: Whether you’re a part- or full-time freelancer, receiving income means filing a tax return. Here are three things to keep in mind as you look back at your 2013 business activity. Dates: The IRS will begin accepting 2013 business returns on Monday, January 13, 2014. For individual returns, the da...

We write. Visit us in Carpenter Country, a magical place that, like our stories, is unreal but not untrue.

Posted in Articles Tagged with: ,