Auto Insurance
Insurance companies don't use the traditional FICO score to determine their rates, but they do have something known as an "insurance score" that will look a lot like your FICO score. Studies have shown that customers that have poor insurance scores tend to make more claims than customers with better scores. While it is unsure why, and it doesn't appear to be fair, the statistics are in favor of people with better insurance rates. If your score is good, you will probably see a discount on your premium. A poor score will make you pay more. Some insurance companies are also adding education into their calculations when figuring out your premiums, giving discounts to those with higher levels of education.
Health and Life Insurance
If you have a poor credit score, your life insurance premium may also be affected. Many insurers believe that if you are not able to handle your money responsibly, you might not be able to handle other areas of your life, like driving responsibly or eating properly, as well. If your credit is poor, you may be paying for it in your health and life insurance premiums.
Home Insurance
The next time you apply for home insurance, the chances are pretty good that your credit could affect your home insurance premiums as well. In some cases, they might even deny you coverage if your credit is less than stellar. There are other factors that are also used in determining your insurance premiums, like the age of your home and how the home was constructed, but increasingly, your credit may play a part.
How to Improve Your Credit
Because having a good credit score is important, you need to do everything that you can to make sure it is as good as possible. The first thing that you want to do is check your credit report. Many people find mistakes in their credit reports, and this could lead to higher premiums through no fault of your own. If there are mistakes on your credit report, you can contact the credit reporting agencies to dispute the mistaken items. Another way to improve your credit is to pay your bills on time. No matter what your credit report says now, you can always improve it. Recent late payments will cause your credit score to go down more than late payments that are old, so start today to pay your payments on time. Another way to improve your credit score is to pay down the credit card debt that you owe. Part of your credit score is based on your debt to available credit, so paying down your bills can help your credit score, and hopefully your insurance premiums too.