insurance Archives | Ovation Credit Repair Services

10 Little-Known Benefits of a Better Credit Score

By | Credit Scores

Better Credit Score Ovation

There are many reasons why you want to make sure your credit score is as high as possible; it’s not just to ensure you can qualify for a credit card or mortgage. Take a look below at 10 little-known benefits of better credit scores that you’ll want to learn right now.

1. Moving Violations Don’t Hurt Your Credit Score as Much

It’s unfortunate, but a moving violation can cause your insurance premiums to go up. The amount of the increase ranges depending on the situation. Your risk level is also taken into consideration. A big part of this is your auto insurance score, which is almost the same as your basic FICO score.

So, you’ll find yourself in a much better situation after a moving violation if you have good credit. In fact, the amount your premiums could go up may be as much as $1,000 a month after a single violation. Yet, if your credit-based insurance score is strong enough, you might only see a smaller increase of $100 to $150 per month.

2. You Can Negotiate With Insurance Providers

Companies that offer auto and homeowner insurance typically use the credit-based insurance score to determine your risk level. If your score is strong, it’s possible to negotiate a better insurance premium.

Additionally, if you can prove your risk level isn’t as high as it seems, you may be able to improve your credit score, and your current insurer may reduce your premiums. If you are rejected, it doesn’t hurt to check whether other insurance companies are willing to offer more competitive rates.

3. Renting a Home Gets Less Difficult

A typical tenant screening process involves a credit check. The landlord or property manager might not care if your credit isn’t good. However, there are many that will use this as a quick way to deny your approval. Someone renting out a place is likely to see your good credit score as proof of your financial stability. Therefore, if you have excellent credit, you’ll get priority dibs for the rental properties you can afford.

4. Reward Cards Become a Lot More Rewarding

You can qualify for any reward credit card when you have excellent credit. This gives you the opportunity to earn cashback rewards on all the shopping you do. The best reward cards sometimes pay as much as 3 to 5 percent back on all your purchases. In the end, you could save thousands of dollars every year by taking advantage of rewards programs.

5. Signup Bonuses Get Better

It’s important to inspect all terms before you apply for a credit card. Picking one just for the signup bonus isn’t a good idea. However, sometimes having excellent credit can gain you access to incredible signup rewards. There are travel reward credit cards that pay especially well. In fact, some signup bonuses can be worth $1,000 or more.

We have a Credit Analyst Ready to Take Your Call Now.

  Free Credit Consultation

Take Advantage of this FREE offer.

6. Better Credit Score = Tier 1 Borrower

Many banks and lenders categorize borrowers by tier level. There are three tiers, which essentially put a borrower into one of three borrowing statuses. You’ll either be ranked as “Good”, “Better”, or “Best,” depending on your FICO score.

The cutoff depends on the company reviewing your file. Sometimes, you’ll need at least a 750 score, but on other occasions, you might require at least an 800 score. So, having as high of a credit rating as possible will ensure lenders consider you as a top tier borrower. This will result in optimal interest rates and a higher chance of approval.

7. Starting a Business Is Less of a Struggle

Most small businesses require a bit of startup capital. Without it, you have a much higher chance of experiencing failure. This is because there are many startup costs and scaling expenses you can face along the way.

Also, if your personal credit is excellent, your business creditworthiness will be sky high. This could mean that you can borrow as much as you need instead of getting capped at a few thousand dollars. If you like, all your monthly expenses and sudden purchases can go under one business card, as well.

8. Skipping the Paperwork

You are pre-approved for many credit opportunities. This ensures less paperwork when you do want a new credit card or loan of any sort. You also get to enjoy shorter wait times when you apply for new credit.

9. Qualifying for Unique Financing Options

There are certain types of financing that are not available to the average borrower. For example, you need to have excellent credit to qualify for a vacation home rental unless you make a a sizable down payment.

10. Real Estate Investments Become Trivial

Now, you have easy entry into the real estate market. You can qualify for mortgages with little down. Your interest rate is super low, so your holding costs are kept to a minimum. Sometimes, you can even get into a great deal without making a down-payment. Then, it’s just a matter of getting renovations done, which you might be able to get cheap financing on, as well.

Increasing your credit score will do you and your family good. The key is to not use your financial strength for impulsive spending or unnecessary expenses. Heed this advice, and you can enjoy the financial gain behind your excellent credit status.

Credit Repair: How Does Your Credit Impact Car Insurance Rates?

By | Budgeting, Credit Reports, Credit Scores, Insurance, Personal Finance, Save Money, Your Credit

Does your credit impact car insurance rates?  You bet it does.  A recent survey confirmed that more than 90% of insurance companies use credit report data as a factor when underwriting new policies.  Auto insurance companies use financial history along with other factors (such as years of driving experience, type of vehicle and primary locations) to attempt to assess the potential risk of a driver.  Apparently, several studies have shown a strong correlation between a consumer’s financial history and potential insurance claims.  Basically, insurance companies feel that if you are responsible with your money, then you are more than likely to be responsible on the road. 

Do insurance companies use your actual credit score?

No, they use what it called an “insurance score.”  An “insurance score” is not the same as traditional financial credit scores.  Theoretically, an “insurance score” is supposed to help determine the likelihood that a consumer will file an insurance claim in the future.  A financial credit score is based on the consumer’s likelihood of defaulting on credit terms.   There are many different financial scoring models in use today, with the most popular still being the FICO score.

While the insurance scoring models are generally deemed as proprietary,  it is generally believed that the models rely on some if not all of the following:  length of credit history, late payments, new applications for credit, types of credit used, payment patterns, available credit, public records, and past-due amounts.  Of course, most financial scoring models are based on similar if not the same criteria.  Regardless of how the scores are calculated, the same general data is being used to calculate both your insurance score and your financial credit scores.

So what is the problem?

According to insurance companies (and the bureaus that make money selling this data to the insurance industry), there is no problem.   The use of insurance scores helps assess the true risk of a consumer, and as a result, premiums are more accurate.  In short, drivers with better credit are rewarded with lower premiums.  Those drivers with lower credit scores pose a greater threat for filing claims, so they pay higher premiums.  How much higher? Some insurance companies charge customers with poor credit as much as three times the rate for customers with excellent credit. This is a great example of why credit repair is an absolute must for some.  Can you really afford to pay three hundred percent more for auto insurance because your credit report reflects incorrect or incomplete information?

While struggling to pay for basic necessities such as food, shelter and medical, some consumers may miss a few payments, which will have a negative impact on their credit scores.  And even worse, credit reports notoriously have errors.  Up to 80% of credit reports have errors, and these errors cause consumers billions of dollars of year in unnecessary expenses, such as increased insurance premiums.  If credit reporting has become more accurate as some recent studies infer, we have yet to see it.

There is a vicious cycle in our country where consumers are penalized with higher costs when they have less than perfect credit.  In turn, the higher costs make it more likely that a consumer that is already having credit issues will have difficulty making payments, and therefore have more credit issues.   Costs increase more, and the likelihood of default increases more.   This pattern is well documented in the credit card industry where some balances spiral out of control when interest rates increase and excessive penalties are applied after a missed payment.

For most, if it difficult if not impossible to maintain full time employment without access to transportation.  Not all places have sufficient public transportation as an option.  When services that can be argued as necessity join the vicious credit cycle, the likelihood that consumers that are falling behind will fall further behind increases significantly.

Help break the cycle – don’t overpay for auto insurance.

One thing you can do – repair your credit so you are not overpaying for necessities like auto insurance.


Call Now for a FREE Credit Consultation