By Madeline Klein on February 1, 2019.
You probably know this by now, but for our newcomers out there, an auto insurance score is a number many insurance providers use to determine your car insurance rate. It looks at your financial history and how responsible you are as a way to help predict how likely it is you’ll have a claim.
A good auto insurance score can benefit your insurance rate, while a bad one could mean you’re paying more each month. If you get your insurance score and realize it’s not quite as high as you want it to be, you can do some things to help increase it. And because finances are a big part of the insurance score, doing things to boost your credit score could positively affect insurance rates. While there’s no quick fix for improving your insurance score, these tips can help better it over time.
1. Get a credit report
Start by getting an understanding of where you are right now. You can pull your credit report once a year (for free!) from each of the three main reporting bureaus: Equifax, Experian, and TransUnion. You can use Annual Credit Report to pull it.
When you’re reviewing your credit report, make sure all the information looks correct. Check to see if you were wrongly faulted for a late payment. Or maybe you just see penalties you know you should have. Either way, reviewing your credit report is a good basis to get an idea of your current credit score and where you can improve.
2. Pay bills on time
Sounds easy enough, right? Paying bills on time is a solid start for improving your credit score, and in turn, your auto insurance score. Set calendar reminders, put sticky notes on your desk, or do whatever it takes to make sure your bill is paid when it needs to be. This simple task can work wonders on your insurance score.
3. Avoid opening too many credit accounts at once
Opening too many credit accounts is a red flag for the insurance score. We know those sign-up bonuses can be fun, but you don’t want to have opened up multiple credit cards all within a short time frame. It can make you look like a risky borrower, which can hurt your insurance score.
4. Keep accounts open
Credit accounts that have been open for a good length of time show stability, and that you are responsible with your credit. If you have no credit, open a new account every once in a while and let that history build. As long as you take care of the account and pay your bills on time, that account will help show that you’re financially responsible.
5. Keep outstanding balances low
Showing that you're using some credit is good for your auto insurance score. You should be using 20-30 percent of your available credit. More than that, and it looks like you may not know how to balance your finances and can’t afford to pay off what you need. That 20-30 percent sweet spot shows you are using credit wisely.
6. Stick with Say
Here at Say, you’ll get a special benefit if you’re a loyal customer. At every six-month renewal, we’ll add 50 points to your insurance score and rename it the Say Score. That’s our way to thank you for sticking with us.
You’ll get those 50 loyalty points every renewal, so your insurance score can keep increasing until you max out at 997. As your score increases, those loyalty points can either help balance out negative things that could lower your insurance score, or they can help increase your score and maybe lower your rate.
What hurts your insurance score
Now that we’ve gone over what helps improve your insurance score, let’s hit some highlights of what hurts your insurance score:
- Having collections out
- Many applications for credit all at once
- Past-due payments
- Numerous credit accounts
- Only a short credit history
- High balances on your accounts
Why you want a good auto insurance score
It may seem like a lot of work to improve your insurance score, but if you do, you may reap the benefits of a lower auto insurance rate. Better insurance scores help providers see that you’re a safe and responsible risk, and you’ll likely get a lower rate because of it. And why wouldn’t you want to save some cash every month?
But good insurance scores are a marathon, not a sprint. Keep at it and use the tips listed above, and hopefully, you’ll reach your goals.