Credit scores can have a drastic effect on your insurance rates. A credit score is based on the system creditors employ whether to extend a line of credit to you. Despite the importance of this score, many individuals fail to understand the overall significance of how this can affect everyday items like how much interest you pay on your mortgage as well as what your insurance rates cost. Since people have a tendency to pay their credit scores little attention, it means many individuals are not trying to improve their score. This can lead to you paying higher premiums across your lifetime. By ensuring you have an accurate credit score that properly reflects your financial history, you can potentially lower your insurance premiums.
Here are two mistakes to avoid when it comes to your credit score:
1. Not checking it
Checking your credit report is one of the most important steps you can take. These offer you a glimpse into who's using your information and provide keen insight into whether someone is fraudulently using your identity. There are several websites that provide free credit reports for you to peruse. Take advantage of these to ensure there is no inaccurate information on your credit score. Check to see that all the addresses, accounts and current balances are correct. If not, file a complaint so the credit agency initiates an investigation.
2. Canceling a credit card
Paying off and canceling a credit card seems like a no-brainer, since no longer having a credit card around will make you seem more reliable and financially secure. However, credit reporting companies use the length of your credit history to establish your report. The longer you keep a credit card open, the better it looks on your report. This is especially true of long-standing cards, provided they do not have an annual fee.
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