So, you probably already know that a good credit score can mean lower interest rates on loans. However, did you know that many insurance companies offer discounts for consumers who maintain an above average credit rating? Here’s how it works and what you should know:

When you get an insurance quote (home, auto, etc.) the insurance company assigns you with an insurance score. Your insurance score takes many things into consideration, one of those being, you guessed it- your credit rating. The higher your credit rating, the better your insurance score.

Insurance providers then use your insurance score as a factor in determining your insurance premiums. If you have a good insurance score, you may qualify for a discount that other policyholders (with lower insurance scores) are not offered.

Studies have found a distinct correlation between a consumer’s credit score and their likelihood of filing an insurance claim. Providers also correlate a higher credit rating with the chance that a consumer will pay their premiums on time more regularly. So, it is only natural that they will reward those customers with a strong credit rating with lower rates.

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