Every person who has a credit card or a loan or more than one bank account will have a credit history. A credit score is a number which represents your repayment capacity and consistency which will be considered by the financier or the bank while lending you money. Credit score is calculated based on many variables like payment history, number of accounts, loans, repayment capacity and consistency, etc. Credit score will always affect the interest rate you pay to the financer to repay the loan. A good credit score is considered to be in between 700 to 850. Few banks consider credit score even at 600 and above to approve the loan but majority banks and financial institution prefers a credit score above 700. Your credit score is also a deciding factor as whether or not you will be eligible for a loan.
As you may already be aware while calculating the car insurance, not just the value of the car which is taken into consideration, there are many other factors like RTO registration city, city of residence, age, cubic capacity of the vehicle, claims history, driving record and other factors. But what you may not know is that your credit score is also taken into consideration while calculating the car insurance premium. The extent of consideration is unknown, but the insurers think that this could be an indication of risk involved in providing car insurance.
The insurers believe that your credit history will help them determine the insurance losses they may face on providing you a car insurance policy. More than 80% of the insurers have now started considering credit score while calculating car insurance premium. So it is now understood that every car insurance provider will assess your credit score to determine if he/she will be able to make the annual premium payments on time.
Keep in mind that your credit history is accessible to any bank and the insurance company can make enquiries about it. The insurer borrows your credit report and passes it through an algorithm to know your insurance score. Which will indicate your insurance record like renewal period, on time payments, claims, etc. The score is then considered for the amount of risk that the insurer is willing to take to provide you a car insurance policy.
Repairing your credit score can never happen over time, it like learning how to cook! It takes time but you will get there. Never take any suggestions from anybody which will pave you a faster way to repair your credit score, because it will always backfire you. The credit score takes time to reflect and minimum amount of time taken is three months. Here are few things you can do to improve the credit score:
The improvisation of a credit score happens slowly and over time. Improving your credit score not only helps you in acquiring loans and credit cards, it will also reduce the insurance premium if it is an exceptional score. Having a car insurance is a major commitment as the amount your pay to insure it is huge. So make sure to have a good credit score to enjoy all the benefits attached with the car insurance. Start improving your credit score today.
Having a car insurance policy is not only mandatory, but it is also necessary given the traffic conditions today. The traffic today makes it difficult to enjoy the drive on road and hence few collisions and accidents sometimes are unavoidable. In moments like these, a car insurance can be your real savior. Car insurances is not only to avoid penalties and fines, it also protects the vehicle and the owner against a number of situations like accidents, third-party damages and injuries, own damage, theft, natural calamities, man-made calamities like protests, riots, etc. It gives a complete protection to the vehicle. Car insurance is basically distinguished into two-types, third-party liability policy and comprehensive policy.
A third-party liability only policy is a minimum requirement under the law. It protects any damages or injuries caused by your vehicle to the third-party. It does not provide any cover to the owner or the vehicle. A comprehensive policy on the other hand provides complete protection as mentioned above. You can also purchase add-on covers like zero-depreciation cover, engine protection cover, no-claim bonus cover, roadside assistance cover, etc. The premium for comprehensive policy is higher and the add-on covers are available only for comprehensive policy for extra premium amount.