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Insurance Rates Up – Check Your Credit Score

By Sally Maison
Published: Tuesday, May 4th, 2010

FANCY-00019126-001Many people faced up a double price on their premiums in the recently issued bills. And the cause was unknown. Dave Fredrick’s premium for home insurance had to be renewed and when it came for renewal he had a raised eyebrow of thoughts. The rate on his Blenheim was double the rate he expected so he decided to find out the cause. 

What he found out surprised him. He was like one of the Canadians who lost their jobs due to recession. With much difficulty, he held out to his house even though he was bankrupt. He went up to his insurance company and questioned them about the hike in his premium and they told him that now they considered his credit scores for determining premiums. He is just one of the thousands who were surprised at their home insurance rates all of a sudden. And many are still unaware of this reason. 

Most of the Canadian insurance companies have looked at your credit scores to determine rates stating that the lesser scores you have, the more claims you make.

Fredrick felt that this made no sense at all. Like when during a rain, your roof leaked, you called for a claim. He stated that he didn’t make claims just because he had no job. Either ways he made no money through it. 

Most people were disappointed after they found out as well. A poll conducted by vision critical showed that about 87% of the people in Canada felt that insurance company didn’t have to use credit scores to determine rates and most of them didn’t even know that credit scores were being considered in the first place. 

So to avoid paying high rates for no reason check for the following things related to your credit score:

  1. If recently you find that your rates in insurance have almost doubled, and you don’t know why? It might be because of your credit score. Without your knowledge, your credit scores might be sliding down on a low hill.
  2. Companies like Equifax tell you your credit scores. And if you think it is low, they provide ways to improve it. And so you can reduce your worries about claims in future.
  3. Not all the insurance companies check your credit scores. So ask your company first. If you are not receiving your desired rate even in this case, then shop at different companies who provide better rates.

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