Statistics have shown that individuals with higher credit scores tend to have fewer accidents than individuals with lower credit scores. Simply stated if you have a good credit, your likely to be a profitable risk for Insurance Companies – so they want you on the books. To try to attract you, they’ll provide a credit to their base premium for you. The higher your credit score the greater your credit (e.g. the lower your annual premium).
You're likely wondering how big of a difference it makes, so let’s talk numbers: The Smith's and Wilson's are neighbors. The replacement cost on their homes are the same and ironically both families have identical vehicles. All other variables are the same as well (e.g. claims history, dates of birth etc.).
Here's the difference:
- The Smith’s have a Credit Score of 690 while
- The Wilson’s have a Credit Score of 845
The Base Premium for each family is $2,000. However:
- With a score of 690 The Smith’s Base Premium will be multiplied by 1.15 – so their annual premium will be $2,300
- With a score of 845 The Wilson’s Base Premium will be multiplied by a factor of .75 – so their annual premium will be $1,500
The Wilson's are paying $800 less each year.
Do you understand? You've earned that extra big screen TV you want in the Garage! So Feel free to use the email share button below to send this post to your wife as undisputed proof.
posted by Dan@hebbeln-ins.com