How can I lower my insurance rates if I have a low credit? When setting your insurance rates, most insurance providers will take a look at your credit-based insurance score.
Although it won’t be the only factor, having a low credit history could cost you money by way of increased insurance premiums.
If you have low credit, you may think improving the score is the only way to save on insurance. But the good news is that that’s not the only way to lower your rates.
In addition to raising your credit score, there are so many other ways to potentially lower your insurance rates. Read this guide to the end to know how to lower your insurance rates if you have low credit.
Ways To Lower Your Insurance Premiums If You Have Poor Credit
The following are ways to potentially lower your insurance rates if you have poor credit. Check them out below:
Shop Around For A New Policy
Insurance companies look at many factors when setting your premium, including how much they want to grow their customer base. While staying with the same insurer for a long time might earn you a discount, it’s always worth comparing prices.
You can check online for quotes to see if another company offers the same coverage for less. If you’ve already paid for your policy, you might get a partial refund if you cancel early and switch to a new provider.
Bundle Your Policies
Most insurers will lower your rates if you buy multiple policies from the same company. For example, you can bundle your auto insurance with a homeowners or renter policy. Also, you may be able to bundle other types of policies like boat, RV, or life insurance. Having several vehicle policies from the same company is a good way to save money.
Look Out For Other Discounts
You might be able to get other discounts on your insurance, depending on your policy and the company. Some discounts are given automatically, but for others, you’ll need to mention them to your insurer.
Here are a few common discounts:
- Safety discounts: Installing a home security system or an anti-theft device in your car could lower your premiums.
- Group discounts: Being a member of certain groups—like alumni associations, the military, or some workplaces—might make you eligible for a discount.
- Payment discounts: You could save by setting up automatic payments, choosing electronic statements, or paying your premiums yearly or every six months.
Some discounts are specific to the type of insurance you have. For instance, if you take a defensive driving course, have good grades (if you’re a student), or drive less, you might get a discount on car insurance.
It’s a good idea to call your insurance agent to see if you qualify for any discounts or if there’s anything you can change to lower your rates.
Lower Your Coverage Limits
Your policy insurance limit is the full amount the insurer will pay to you for a covered claim. Just so you know, there may be different limits for various types of coverage.
Such as dwelling and personal property coverage on the renters or homeowners policy and liability and collision coverage limits with car insurance.
Lowering your coverage limits will help you save on your insurance costs. However, this option can be quite risky if your lower coverage limits do not cover major incident losses.
Raise Your Deductible
Your deductible is the amount you need to pay out of pocket before your insurance kicks in to help with a claim. If you choose a higher deductible, your insurance premiums might be lower, but you’ll need to be ready to pay that amount if something happens.
It’s a good idea to set aside some of your savings for your emergency fund. You don’t want to risk this money in investments, but you can still earn a little by keeping it in a high-interest savings account.
Change Your Types Of Coverage
You can lower your insurance costs by removing certain coverage options or benefits you don’t need.
For instance, if you don’t need roadside assistance, you can drop that from your auto policy. Or, if your car isn’t financed, you might skip collision and comprehensive coverage. With homeowners insurance, extras like flood, earthquake, and sinkhole coverage are often optional.
You can also choose between two types of property coverage: actual cash value and replacement cost coverage.
- Replacement cost coverage costs more because it covers the full cost to replace your property.
- Actual cash value pays based on the current value of your property, which might be less than what it would cost to replace it. For example, if your TV is stolen, actual cash value would pay you the current market value, which might be lower than what you’d need to buy a new one.
Improve Your Credit
Credit-based insurance scores are similar to credit scores for lending, but they are also very different. In the long run, paying off your loans, making payments for premiums on time, and paying down balances could help your credit.
Right now, it’s a good idea to focus on getting any overdue accounts up to date and paying off or settling any collection accounts. If you’re using a lot of your available credit, paying down your credit card balances could also help improve your situation.
Monitor Your Credit Properly
Keep an eye on your credit to see where you stand, and regularly check your credit reports and scores for any changes.
Even if it doesn’t immediately affect your insurance rates, a higher credit score can help you get better deals if you apply for a loan or credit card.
