Credit scores are based on an analysis of an individual鈥檚 credit history. These scores are used for many purposes such as securing a loan, finding a place to live, getting a telephone and buying insurance. Insurers often generate a numerical ranking based on a person鈥檚 credit history, known as an 鈥渋nsurance score,鈥 when underwriting and setting the rates for insurance policies. Actuarial studies show that how a person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims. Insurance scores are used to help insurers differentiate between lower and higher insurance risks and thus charge a premium equal to the risk they are assuming. Statistically, people who have a poor insurance score are more likely to file a claim.
As a result, establishing a solid credit history can cut your insurance costs. To protect your credit standing, pay your bills on time, don鈥檛 obtain more credit than you need, and keep the balances on your credit cards as low as possible鈥攊deally, try to pay off the bill in full each month. Also, check your credit record regularly, and request that any errors be corrected immediately so that your record remains accurate.
听
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies鈥擡quifax, Experian, and TransUnion鈥攖o provide you with a free copy of your credit report, at your request, once every 12 months. For more information, go to the
Free annual credit reports can be ordered from