In last week’s blog, I wrote there is one factor that impacts the cost or premium a person or family will pay for home, renters and car insurance. In reality there are multiple things that impact the premium of home or renters or auto insurance, and we’ll go through each of them in future blogs.
That said, there is one common factor that influences what you pay for personal insurance, your credit. The bottom line is that people with good credit pay less for their insurance and people with not so good credit pay more for the same insurance. The reason for this is that it has been statistically proven a person’s credit will accurately predict their frequency of filing a claim.
So, how do you check credit? This is not a “push one button” and you get the answer but rather a series of steps depending on the answer you’re looking for.
- As a part of Free Credit Reporting Act which was created due to the recession of 2008, anyone 18 and older can get one free copy of their credit report annually.
- You can access your free credit report from www.annualcreditreport.com the only web site authorized by the Federal Trade Commission to provide the free annual report by law.
- You may also request your free Annual Credit Report by calling (877) 322-8228.
- They will provide a free report from one or all three of the major credit reporting bureaus, TransUnion, Experian, and Equifax.
Your free credit report shows a number of things including;
- Current & past addresses
- Open & closed accounts
- What type of accounts you have
- Your payment history
- Who’s inquired on a promotional basis to offer you credit and when they inquired
- Who’s inquired about your credit for the purpose of an account review or other business transaction with you
There will be differences in the reports. These differences occur because some creditors report to one bureau and not another while other creditors will report to all three bureaus. Or they may be confusing you with someone else or they just got something wrong.
What these reports don’t show is your credit score, a numerical representation of your credit. To get your score, you have to pay and that will run you about $30.00 for a report showing the scores of all three bureaus.
- The credit score will be a numerical number from each bureau and will indicate whether you have good credit or not so good credit.
- What you aren’t getting is your FICO score, a number used to determine your credit risk. This is the score that is utilized when you apply for credit and what insurance carriers are looking at to help determine your premium.
In order to get your FICO score, you’ll need to go to another web site, www.myfico.com. There you are able to order a true FICO score and that will run you between $18 and $20 for two of the three bureaus. Their report will show you your FICO score but not the underlying reasons behind the credit score. The credit reports that will give you the information behind why your FICO score is what it is for each bureau.
Please note, when you pay, you’re essentially setting up a monitoring service, so if you don’t want the monthly monitoring service and the recurring charge, cancel it within the trial period. The trial periods range from 7 to 14 days.
My recommendations are;
- Get the free credit report from all three bureaus and review them thoroughly for accuracy.
- If that gives you the information you need, stop there.
- If you want to know your FICO score, then order that from www.myfico.com but I would not worry about getting the credit score from the bureaus.
- You’ll be best equipped if you get both the reports and your FICO score.
In next week’s blog, we’ll begin to outline the steps you can take to clean up your credit so ultimately you’ll be financially stronger and pay less for your home, renters and car insurance.
Have a comment or experience we’d benefit from? Share it with us in the comments section below.
