No matter how much money you earn or where ever you may live, having a poor credit score can affect you in more ways than you might realize. If you are trying to finance a new car in Coppell or obtain a mortgage for a house in the DFW area of Texas, you can have a hard time getting a loan if you have bad credit. Poor credit score can be a reason that you do not get a job or it can cause you to have to pay more for your auto insurance.
As your independent insurance agent in Coppell, Texas, we see the large discrepancy in car insurance rates that someone with a 500 FICO score and someone with a 750 FICO score pays. While we understand that good people run into financial problems all of the time that causes a decline in their credit score, if you find yourself in such a situation, there are ways to rebuild your credit score and qualify for a lower premium on your car insurance.
Insurance companies consider your credit score as a factor in assigning risk premiums. Statistics show that people with good credit scores act more responsibly and get in fewer accidents. If your credit score is low, you should start working on a plan today to build it back up to a solid number.
You can not improve your credit overnight. Just as it took months or years to fall into financial distress, the process of re-establishing your credit will take some time. You should start by making sure you pay all of your bills on time. If you have past due bills, contact your creditors and make arrangements to pay the debt off at a rate you can handle.
You can also improve your credit score by paying off your credit cards. Credit rating agencies look at your debt to credit limit ratio. For instance if you have a $10,000 limit on your unsecured credit cards and only $1,000 of available credit left, that will reflect negatively on your score. Stop charging and pay down your debt.
If you want lower auto insurance rates, make a concentrated effort to reform your spending habits. When you reduce debt and pay your bills on time, your FICO score will go up.