Will My Credit History Affect My Alabama Insurance Rates?

In Alabama, your credit history can influence how much you pay for insurance premiums. However, many other factors also affect your auto and home insurance rates. Contact Servi-Express in Homewood, Alabama, to explore your insurance options and get personalized insurance quotes.

Why Does Credit History Matter to Insurers?

Insurers use credit history information as a predictive tool to evaluate the likelihood of you filing a claim and estimate the potential cost of that claim.

A good credit history can lead to lower insurance premiums, while a poor credit history may result in higher rates. This correlation is based on statistical data that suggests individuals with higher credit scores tend to file fewer claims and incur lower claim costs. As a result, insurance companies view them as lower-risk policyholders.

Alabama insurers must comply with state laws when using credit information to determine rates. They must inform you if your credit history adversely impacts your premium rates and provide you with an explanation of how credit history affects pricing.

How Do Alabama Insurers Use Credit History to Determine Insurance Rates?

Insurance companies in Alabama, like in many other states, use credit-based insurance scores to help assess risk and determine premiums. These scores are based on factors from your credit report and include the following:

• Your payment history
• Outstanding debts
• Length of credit history
• Types of credit used
• Number of recent credit inquiries

Your insurance-based credit score may differ from your FICO score and other credit scores used by auto and mortgage lenders. Your agent can help you understand the relationship between your scores and your premiums.

Can Improving Your Credit Score Keep Home and Auto Insurance Premiums Low?

Your insurance-based credit score is just one of the many factors insurers may use to help determine your premiums. If you’re concerned about how your credit history affects your insurance rates, there are steps you can take to potentially improve your credit score:

• Pay bills on time. Timely payment of bills is one of the most significant factors affecting your credit score.
• Reduce debt. Lowering your credit card balances and paying off debts can improve your credit utilization ratio, which has a big impact on your credit scores.
• Monitor your credit report. Regularly review your credit report for inaccuracies and promptly dispute errors.

Contact Us

Contact Servi-Express to learn more about how credit scores can affect home and auto insurance premiums.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.