Those who are dealing with overwhelming debt know that a poor credit score can affect many aspects of your life. But, did you know that your credit score counts for your car insurance? It may seem ridiculous and quite frankly, unrelated, but it’s true. In Parker, Aurora, and Centennial, you may be paying higher vehicle insurance rates because you have a low or poor credit score.
Poor Credit and Car Insurance: Factors Used with the Credit Based Insurance Scores
Credit based insurance scores are based on one thing: your credit score. It does not take any other information into account, like age, gender, income, employment or any other personal information. Now, your credit-based insurance score is not the only factor involved. The credit-based insurance score is used along with your driving history and previous claims to determine your premium. Insurance companies believe using this information is the most appropriate way to determine the likelihood that you will file an insurance claim in the future.
The Science Behind Credit-Based Insurance Scores
While obviously not always true, there have been actual scientific studies that found people with lower credit scores pose a greater risk to insurers. They often have higher claims payouts and take on more car insurance losses. Basically, they correlate a lower credit score with a higher risk. And when it comes to insurance, a higher risk means a higher premium.
What Factors Affect Your Credit Score in Aurora?
There are many different factors that come into play when determining your credit score. Some positive factors include:
Open credit lines in good standing
No history of making late payments
No accounts in past-due status
Established credit history
Some factors that affect your credit score negatively are:
Accounts sent to collections
High amount of debt
Short credit history
History of making late payments
Poor Credit Score? Expert Centennial Bankruptcy Attorney Barry Arrington May Be Able to Help!
Often, when people have a very low credit score due to overwhelming debt coupled with an inability to make any significant payments, filing for a Chapter 7 or Chapter 13 may be a good option. Your credit score will not be ruined by filing for bankruptcy. Actually, with smart money management after a bankruptcy discharge, your credit score can improve significantly in a relatively short amount of time.
If you are struggling with a low credit score and serious debt, call experienced bankruptcy lawyer Barry Arrington at 303-205-7870 to see if bankruptcy may be an option for you. Make the call to begin your journey toward financial freedom.