November 1, 2010

How The National Credit File Affects Auto Insurance Rates

Insurance companies use reports from the National Credit File as one of their sources when creating auto insurance rates for new customers. A good credit report can help keep your insurance rates lower with most companies.

The National Credit File compiles information about a person's credit history to help insurance companies determine that person's risk factors. Your auto insurance rates are adjusted depending on the ranking you receive through the National Credit File. The file collects information about slow payments, non-payments, loan defaults, credit card debt to income ratios and other financial information that is available publicly. The National Credit File is not exactly the same as a traditional credit report because it is focused primarily on information that auto insurance companies would find interesting about a person's financial behavior.

Your car insurance rates can be positively or negatively impacted by the information the National Credit File contains about your finances. If you have experienced several problems with your finances, the chances are very good that your auto insurance rates will be higher. Insurance companies consider elements that cause a lower credit rating to be indications that a person is less responsible in general. Your rates will be higher because the insurance agencies feel that you are at a higher risk for behavior that could lead to an increased number of claims. The way you treat your finances reflects the way you approach important aspects of your life.

The National Credit File reports are used by almost every national car insurance company in America. The reports provide concise and accurate financial information about prospective and current insurance customers that the insurance companies can use to adjust rates and keep costs lower. The National Credit File reports are also used by other insurance providers, such as life or health insurance companies. Because the information in the reports is focused on items that are relevant to insurance companies, the reports are not often used by other types of lending agencies.

It may take time, but you can improve your National Credit File rating. The best way to increase your score is to pay all of your bills on time. Try to keep your revolving credit card balances as low as possible. Do not make purchases that are outside of your financial comfort zone. The thing that insurance companies are most interested in about your financial behavior is your consistency and reliability. Even if you are carrying a large amount of debt, you may be able to get lower car insurance rates if you pay your bills on time. Maintaining responsibility over all of your finances will enhance your profile in the National Credit File.