From Our Blog How Your Credit Score Affects Insurance Rates in Nova Scotia?
Typically, your credit score is used by lenders to gauge your ability to make your monthly payments. Now in Nova Scotia, your credit score can also affect your home and car insurance rates. In this helpful blog, we shed light on how your credit score can impact your insurance rates.
Why do insurers want to know your Credit Score?
Your insurance premium is determined by several factors such as: where you live, your age, your claims history, how many kilometers you drive, and your credit score. Research indicates that if you are responsible with your finances, you will also be responsible on the road, when taking care of your home and with your health.
Now in Nova Scotia, insurance companies can ask you for your credit score in exchange for a better rate. However, you can not be denied insurance if you refuse.
The higher (better) your credit score is, research has shown you are less likely to be in an accident and file a claim. If you have a good credit score, you are generally more likely to abide by road rules and keep your car in a road-safe condition. This can help lower your insurance rate. Conversely, a lower credit score may suggest there is a potential you will miss making a monthly insurance payment.
With a credit score, insurance providers may look at various aspects of your credit history, including:
- How many credit accounts you have – credit cards and loans
- Your credit payment record
- The overall amount of debt you have
- Your debit outstanding and available credit limits
Do I need to worry?
Often drivers with a good credit score can get better rates on insurance. So, these car owners are usually happy to give consent for a credit check to save on their insurance premiums.
However, if you haven’t built up a solid credit score, you may have to pay more for insurance. Fortunately, insurance companies look at many other factors when they quote an insurance policy, so a lower credit score is not necessarily cause for concern.
The Insurance Bureau of Canada published a voluntary code of conduct for credit checks and says 85% of Canada’s home and car insurance companies have signed on. And of course, Bauld Insurance has signed on, making this code of conduct a priority, which includes:
- Asking for your consent before checking your credit score.
- Not cancelling or denying insurance when you don’t consent.
- Using other relevant info to calculate your premiums if you don’t have much credit history.
Should I check my Credit Score before buying insurance?
It’s a good idea to check your credit status, even if your credit won’t affect your insurance. If you don’t know your credit score, you can check it online through several free online services. Borrowell is a free (Canadian) service, with it you’ll get monthly updates on your score, tips on how to improve, and offers for products that match your credit.
How can you improve my Credit Score?
Take the following credit-improving steps to get the best possible insurance rates:
- Pay all your bills on time.
- Keep your credit card balances low.
- Apply for credit cards only as needed.
- Search and select loans, mortgages, and credit cards with the lowest interest rate within a specific time.
- Do not close unused credit cards as a means of raising your credit score. Conversely, do not open new accounts to increase your available credit.
Learning more about how your credit score impacts your insurance rates helps you be well informed. If you have questions contact a Bauld Advisor today or request a home insurance quote or a car insurance quote online.