Miami Florida Car Insurance Information
Reader’s Question:
When renewing my car insurance, I was asked to submit my recent credit report in Miama, Florida. What does my credit score have to do with my auto insurance?
Tony
Miami, FL
More and more insurance companies are using your credit history as a key factor in determining your premiums. The controversial number is called an insurance risk score and is an indicator of how likely you are to file a claim. It is calculated using a special formula developed particularly for insurers. This formula is not available to consumers at the moment although many states are considering passing legislation to control the use of this score.
A few things are now known about this mystery score and the factors used to evaluate it:
1. Your payment history: Being the largest factor in your rating, it consists mainly of the number of adverse public records (i.e. bankruptcy, collections, liens), your documentation of past credit payments and presence of delinquencies on your credit record. All of these components account for about 35% of your insurance risk score.
2. 30% of your risk score is determined by your debts. This includes the number of open accounts, their types and the amounts charged to each.
3. The amount of time that you’ve had credit and the precise length of time for which you have had particular accounts make up 15% of your risk score.
4. The next 10% of your score is calculated based on your recent credit activity. Efforts to restore problematic credit, recent inquiries and number of new accounts are components of this factor.
5. The final 10% of your risk analysis is determined based on the types of credit which are usually credit cards, retail store accounts and mortgages. The number and activity of all the types of credit on your report are evaluated.
If you have excellent credit, use it to your advantage and shop around for the best care insurance rates in Miami Florida. If you are dealing with troubled credit, stick with your current insure until your financial situation improves.