Most people already know that having a low credit score will hurt their chances of getting a mortgage, car loan, or credit card. However, poor credit can also cause you to be denied insurance on your car or home, adding to a growing number of ways in which your credit history can impact your financial life.
When you apply for insurance, there is a good chance the insurer will run your credit report. This is because in the past, insurance companies have found credit scores to be a highly accurate indicator of risk. In other words, a person with a poor credit score is seen as a high risk, and even decide whether to insure you at all.
The bottom line is that a low credit score can result in a complete denial of insurance, or it can cause you to be charged higher premiums than you’d otherwise have to pay.
It’s always smart to check your credit report before applying for a loan, insurance or even a new job. However, if you didn’t take that step and settling the debt can get that item marked as “paid” on your report.
If it turns out that your credit report looks fine, then that isn’t likely to be the cause of a denial or unusually high rate. Age and your driving record will of course impact auto insurance. Those who are having difficulty obtaining insurance should remember to shop around, or talk to an insurance agent who can do comparison shopping amongst a number of companies.