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Showing posts with label insurance policy. Show all posts
Showing posts with label insurance policy. Show all posts

Thursday 8 October 2015

What information do I need to give to my agent or company?

What information do I need to give to my agent or company?


Your agent will ask you what make and model cars you own, roughly how many miles you drive each year, and what kind of liability coverage you will need. The agent will also want to know how many people drive the cars, how old the drivers are, where you live, and driving records of each household member.

The agent will then ask more detailed questions about your cars, such as their Vehicle Identification Numbers (VIN), whether they have passive restraint systems or air bags, anti-lock brakes or anti-theft devices. If you already have another insurance policy with the company for home or life insurance, you might receive a discount on your auto policy. You should also mention if you or other drivers in your household have completed safe-driving courses and if student drivers in your home are getting good grades—both of these may qualify you for discounts on your auto policy.

Once the agent has assembled all of the information, he or she will quote you a premium. The premium will depend on all the factors above and on the deductibles you choose.

Credit and Insurance Scores

Credit and Insurance Scores

What is a Good Credit Score?

How to Improve Your Credit Score?

Does Checking My Credit Score Hurt My Credit?


Insurance scores and credit scores differ. Credit scores predict credit delinquency while insurance scores predict insurance losses. Both are calculated from information in a credit report, such as outstanding debt, bankruptcies, length of credit history, collections, new applications for credit, number of credit accounts in use, and timeliness of debt repayment. Insurers or scoring agencies then calculate the insurance or credit score by assigning differing weights to the favorable or unfavorable information in the credit report. Information such as income, ethnic group, age, gender, disability, religion, address, marital status and nationality are not considered when calculating an insurance score.
Credit and insurance scores measure how well individuals manage their money—not how much money they make. And actuarial studies show that how a person manages his or her financial affairs is a good predictor of insurance claims. Statistically, people with a low insurance score are more likely to file a claim.
The good news is, most people have good credit and most people will pay less for insurance than they would if insurance scores weren’t considered.

A good credit score is what each of us aspires to. After all, a credit score is one of the important determining factors when it comes to borrowing money – and getting a low rate when you do.
But trying to pin down a specific number that means your credit score is “good” can be tricky. When it comes to figuring out what makes a good credit score, there are a few different schools of thought.

How Do I Rate?

Most credit scores – including the FICO score and the latest version of the VantageScore – operate within the range of 301 to 850. Within that range, there are different categories, from bad to excellent.
  • Excellent Credit: 750+
  • Good Credit: 700-749
  • Fair Credit: 650-699
  • Poor Credit: 600-649
  • Bad Credit: below 600
But even these aren’t set in stone. That’s because lenders all have their own definitions of what is a good credit score. One lender that is looking to approve more borrowers might approve applicants with credit scores of 680 or higher. Another might be more selective and only approve those with scores of 750 or higher. Or both lenders might offer credit to anyone with a score of at least 650, but charge consumers with scores below 700 a higher interest rate!

The Credit Score Range Scale

There are many different credit scores available to lenders, and they each develop their own credit score range. Why is that important? Because if you get your credit score, you need to know the credit score range you are looking at so you understand where your number fits in.
The Credit Score Range Using Various Scoring Models:
  • FICO Score range: 300-850
  • VantageScore 3.0 range: 300–850
  • VantageScore scale (versions 1.0 and 2.0): 501–990
  • PLUS Score: 330-830
  • TransRisk Score: 100-900
  • Equifax Credit Score: 280–850
With all of the scores listed above, the higher the number the lower the risk. That means consumers with higher scores are more likely to get approved for credit, and to get the best interest rates when they do. And they are more likely to get discounts on insurance. What is considered a “high” score depends on what type of score is being used.
If your FICO score is 840, for example, you’re just 10 points shy of the highest score possible and your credit is “superprime.” But if you have an 840 VantageScore (using version 2.0), it’s not as spectacular because you’re 150 points away from the highest possible score.

What’s Your Score?

Don’t assume your score is good (or isn’t) just because you have always paid your bills on time (or haven’t.) The only way to know whether you have a good credit score is to check. You canget your credit score free once a month at Credit.com. This is a truly free credit score – no payment information is requested. In addition to the number, you’ll see a breakdown of the factors that affect your score and get recommendations for making your credit as strong as possible.

What Can I Get With A Good Credit Score?

Some of the best credit cards–from rewards cards to 0% balance transfer offers–go to consumers with strong credit scores. You’ll find great credit cards for good credit here.
A good credit score can also get you a lower interest rate when you borrow. That means you will pay less over time.
For example, if you’re buying a $300,000 house with a 30 year fixed mortgage, and you have good credit, then you could end up paying more than $90,000 less for that house over the life of the loan than if you had bad credit.
So, in the end, it really pays to understand your credit scores and to make them as strong as possible.

Your credit score plays a critical role in your overall financial life, and has a direct impact on whether or not you’ll be a approved for a credit card, a car loan, a mortgage or any other type of financing — and at what interest rate and terms. It also influences your home and auto insurance premiums and whether not you’ll have to pay a deposit on an apartment rental and utilities such as electric, water, cable, Internet and phone.
The fact is, a poor credit score can end up costing you hundreds, if not thousands, of dollars in interest and other costs throughout your lifetime — and that’s assuming you’re able to qualify for financing at all. If you’re suffering from a poor credit score, there are steps can take to improve your credit score, so that you can start taking advantage of all the benefits that having great credit affords.
If you’re looking to improve your credit score, you must first identify what’s holding your score down so that you can address the problem and focus your efforts where they’ll have the greatest impact. Here are four steps that’ll get you started:

1. Check Your Credit Reports for Accuracy

Your credit score is solely based on the information reported in your credit report. If the information in your credit report is inaccurate, so too will be your credit score. For this reason, you’ll want to make sure you check all three of your credit reports for errors. If you find errors, be sure to dispute the items directly with the credit reporting agencies to you have them corrected. Under the Fair Credit Reporting Act, you’re entitled to one free credit report from each of the three credit reporting agencies once every 12 months. Learn how to claim your free annual credit reports.

2. Find Out Where Your Credit Score Currently Stands

After you’ve verified that the information in your credit reports is accurate, it’s time to find out where your credit score currently stands. Unlike credit reports, your credit score is not included in the annual freebie so you’ll need to either pay for access, or use a free credit score resource, such as Credit.com’s free Credit Report Card.

3. Find Out Why Your Score is Low

Credit scoring models are designed to include “score factors” or “reason codes” that explain where you lost the most points in your credit score calculation. These factors are specific to your individual credit history and will vary from person to person. There is no “one size fits all” credit improvement plan, but with the help of your score factors, you’ll be able to outline your very own credit score improvement plan that’s specific to your credit DNA.

4. Outline Your Plan and Stick to It

Now that you’ve identified the causes of your low score, it’s time to put a plan in place and stick with it. Generally, there are three main causes for low credit scores — too much credit card debt, negative information caused by poor credit management, or a combination of the two.
If your credit score is low because of too much credit card debt, fortunately, you’re looking at a quick and easy fix — provided you have enough cash on hand to pay down the debt. A large percentage of your credit score — 30% — is based on your revolving utilization, or the proportion of your balances in relation to your credit limits on your credit card accounts. By simply paying down your credit card balances you can see your credit score improve almost overnight. As soon as your credit card issuer reports the update to the credit reporting agencies, your credit score will reflect the change.
If your credit score is low as a result of negative information, unfortunately, it’s going to take time and consistent changes in the way you manage your credit obligations. You’ll first need to address any outstanding collections or unpaid debts, and from there, you’ll want to begin adding new positive credit information to your credit reports to help offset the damage. The key here is to be realistic about the time it will take to improve your credit score. If you’ve suffered from past credit problems, the fastest, most effective way to begin rebuilding your credit and improving your credit score starts with adding positive credit information and managing the accounts impeccably this time around. That means making all of your payments on time, and making sure you keep your credit card balances low.

Contrary to popular belief, checking your own credit score doesn’t hurt your credit. Unlike credit-damaging “hard” inquiries that occur when you apply for credit, checking your own credit report is considered a “soft” inquiry and has no impact on your credit report or your credit score. In fact, the only person that actually ever sees a soft inquiry is you — when you access your own credit report.
Credit inquiries are one of a number of factors that are used in determining your credit score, accounting for 10% of the overall score calculation. Essentially, the more credit inquiries you have in a short period of time, the larger the impact to your credit score — but it’s the type of inquiry that matters here.

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There are two different types of credit inquiries — a hard inquiry, which occurs whenever you apply for credit; and a soft inquiry, which occurs whenever you access your own credit report, or an institution pulls a preapproval or promotional inquiry to pre-qualify you for a marketing offer. Only one has a negative impact on your credit score, and it’s the hard inquiry.
Whenever you apply for credit, whether it’s a for credit card, an auto loan, a mortgage or any other type of credit, the lender will pull your credit report and score as part of the application process. This application process helps the lender determine whether it will approve the loan and at what interest rate and terms. Each time you apply for credit and a lender pulls your credit, a “hard” inquiry will be reported in your credit report, indicating that you’ve actively applied for new credit. Hard inquiries can lower your credit score.
Now that you know that checking your own credit score won’t hurt your credit, you can check your own credit score as often as you like. In fact, you can check your credit score for free by signing up for Credit.com’s free Credit Report Card to see where you stand.


WHAT NEWYORK TIMES SAY ON CREDIT SCORE:
You may not have checked your credit score lately, but there’s a good chance someone else has.

If you have applied for a mortgage or a loan — or even received a credit card offer in the mail — someone accessed that three-digit number to help determine the amount you can borrow and the interest you’ll owe on it.

So what goes into this all-important score? And how can you make sure you’ve got a good one?


The term credit score usually refers to your FICO score, a number based on a formula developed by the Fair Isaac Corporation. Fair Isaac looks at a summary of all your credit accounts and payment history. If you’ve got a mortgage, a MasterCard or a Macy’s account, it will be included in the report, as will late or missed payments. FICO scores range from 300 to 850, and Fair Isaac calculates them for each of the three big credit-reporting agencies: Equifax, Experian and TransUnion. That’s one reason why your FICO score with each may differ slightly. Generally speaking, the higher your score, the more money you can borrow and the less you’ll pay for the loan.

Here’s how your score is determined:

¶ 35 percent is determined by your payment history. Do you regularly pay your bills or fines on time to any creditor that submits your information to the credit bureau? Even unpaid library fines, medical bills or parking tickets may appear here.

¶ 30 percent is based on the amounts you owe each of your creditors, and how that compares with the total credit available to you or the total loan amount you took out. If you’re maxing out your credit cards, your score may suffer.

¶ 15 percent is based on the length of your credit history, both how long you’ve had each account and how long it’s been since you had any activity on those accounts. The fewer and older the accounts, the better (assuming you’ve made timely payments).

¶ 10 percent is based on how many accounts you’ve recently opened compared with the total number of your accounts, as well as the number of recent inquiries on your report made by lenders to whom you’ve applied for credit. Your score can drop if it looks as if you’re seeking several new sources of credit — a sign that you may be in financial trouble. (If a lender initiates an inquiry about your credit report without your knowledge, though, it should not affect your score.) Shopping around for an auto loan or mortgage shouldn’t hurt, if you keep your search to six weeks or less. But every inquiry you trigger when you apply for a credit card can affect your score, says Craig Watts, a spokesman for Fair Isaac. So be selective.

¶ The final 10 percent is determined by the types of credit used. Having installment debt — like a mortgage, in which you pay a fixed amount each month — demonstrates that you can manage a large loan. But how you handle revolving debt, like credit cards, tends to carry more weight since it’s seen as more predictive of future behavior. (You can pay off the balance each month or just the minimum, for example, charge to the limit of your cards or rarely use them.).
For the best rates on a loan or credit card, you want a score that’s above 700, at least. To achieve that, make sure to pay all your bills on time. It’s also a good idea to have at least one credit card you plan to use for a long time, but not too many. Keep a low balance — generally less than one-third of your total credit limit. Of course, it’s best to pay off your balance entirely each month. And stay on top of the information in your reports.
You can get a free copy of your credit report from each of the three major credit agencies once a year. Be sure to order it throughannualcreditreport.com, the only authorized online site under federal law. If you notice information that’s inaccurate, you can submit a request for removal online at Equifax, , Experian or TransUnion. Or submit your request by mail. Be sure to specify what information you think is inaccurate and why, and include any documents that support your argument. Ask in writing that the information be corrected or removed from your report. By law, the bureaus must investigate your complaint, usually within 30 days, and give you a response in writing (or via e-mail, if your request was made online) and a free copy of your report, if the information is changed as a result. Your score should reflect that change shortly after.
To see your actual score, you’ll generally have to pay. You can go through Equifax, Experian or TransUnion directly, but be aware that the score you order may be one developed by the agencies themselves, like the TransUnion TransRisk New Account Score, Experian Plus or VantageScore. These are different than the FICO scores lenders generally use when they evaluate your loan applications. Myfico.comoffers two reasonably priced options on its site. The $15.95 FICO Standard package (as of December 2008) gives you 30-day access to one FICO score and a credit report from one of the three major credit agencies. The $47.85 FICO Credit Complete package gives you 30-day access to your FICO scores and credit reports from all three major agencies. Myfico.com and other sites also offer services that monitor your score and report for a monthly fee (ranging from about $4.95 a month for myFico’s quarterly report to $6.65 a month for TransUnion’s Credit Monitoring Service).


Whether you need to monitor your credit that often is debatable. For most, a close look at the free annual reports from each bureau is probably enough. But if you plan to apply for a loan or credit card, check your score and report at least a couple of months beforehand. Not only will you be aware of how creditworthy you are, you’ll also have time to remove any errors you spot and make sure your score reflects the changes before you fill out any applications.



Things Consumers Don't Understand About Credit Scores:
Credit card experts debunk common misconceptions about credit scores.

ST. LOUIS – Three numbers can affect everything from securing a mortgage or loan to how much interest you'll pay when you're approved for a house. And while they're just three numbers – that typically range from 300 (very bad) to 850 (very good) – there's a lot of information and regulations behind them. But don't worry, if a thing or two about your credit score has left you scratching your head, you're not alone.
"Consumers look at their credit report and they're like, 'I don't understand it. I don't know what it means,'" says Gerri Detweiler, director of consumer education for credit.com and host of Talk Credit Radio.
To clear up the confusion, several credit experts spoke at FinCon, a financial conference in St. Louis last week, and debunked misconceptions about credit scores. Here are 10 common things consumers tend to get wrong about their scores.
1. The credit bureaus Experian, TransUnion and Equifax evaluate my credit score. The three bureaus generate credit reports, but they have nothing to do with judging your credit score or advising lenders whether to approve or deny an application. "The credit report does not rate your credit," says Maxine Sweet, Experian's vice president of public education. "It simply lays out the facts of your history." So who determines what your credit score means? Companies such as FICO and VantageScore Solutions evaluate your credit risk level – what lenders use to decide how risky it is to give you a loan – based on your credit report. Separate scoring models have been developed to help businesses predict if a consumer will make payments as agreed, and the credit score is just one factor used in the model.
2. There's only one type of credit score. There are actually many different scores. For example, FICO has several models with varying score ranges. "If you get your FICO score from one lender, that very likely won't be the same score that you would get from another lender, even though they're using the FICO model," Sweet says. Consumers shouldn't focus on the number, she adds. Instead, look at where your score falls on the risk model and what influences that risk. If a lender declines your application or charges you a higher fee because of your risk, it will disclose factors that are negatively impacting your risk, Sweet explains. "Those factors will tell you what behavior you will need to change to change your credit history," she says.
3. When I close a credit card, the age of the card is no longer factored into my credit score. The only way you lose the benefit of a card's age is if a bureau removes the account from a credit report, says John Ulzheimer, credit expert at CreditSesame.com. "As long as it's still on a credit report, the credit scoring system still sees it, still sees how old it is and still considers the age in the scoring metric," he says. Take Ulzheimer's father as an example: He uses a Sears credit card he opened in 1976, which is the oldest account on his credit report. "The assumption is if he were to close that card, he would lose that decades-long history of that card and potentially lower his score. That's not true," Ulzheimer says. However, there is one caveat: The score would be lost after 10 years (see No. 4).
4. A credit card stops aging the day I close it. Even when you close an account, the credit card still ages. For instance, if you close an American Express card today, the card will be one year older a year from now. And as explained above, you won't lose the value of the card's age. "Not only does it still count in your score, but it continues to age," Ulzheimer says. However, a closed account will not remain on your credit report forever. The credit bureaus delete them from credit reports after 10 years, according to Sweet. There's just one exception: "If the account is in a negative status, it will be deleted at seven years because we can only report negative account history for seven years," she says.

SOURCE: http://money.usnews.com/



What Determines the Price of My Auto Insurance Policy?

What Determines the Price of My Auto Insurance Policy?


The average yearly auto insurance premium is almost $800, but there is wide variation around this average. Many factors can affect your premium, and they all help determine how likely you are to have an accident. Perhaps surprisingly, many of them do a better job than just your driving record. Not all companies use all of these factors, and some might use factors not listed here. Your premium may depend on, in no particular order:

Your driving record.
The better your record, the lower your premium. If you have had accidents or serious traffic violations, it is likely you will pay more than if you have a clean driving record. You may also pay more if you are a new driver and have not been insured for a number of years.

How much you use your car.
The more miles you drive, the more chance for accidents. If you drive your car for work, or drive it a long distance to work, you will pay more. If you drive only occasionally—what some companies call “pleasure use”, you will pay less.

Where your car is parked and where you live.
Where you live and where the car is parked can affect the cost of your insurance. Generally, due to higher rates of vandalism, theft and accidents, urban drivers pay a higher auto insurance price than those in small towns or rural areas.

Other factors that vary from one area or state to another are: cost and frequency of litigation; medical care and car repair costs; prevalence of auto insurance fraud; and weather trends.

Your age.
In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or young people below age 25 drive your car.

Your gender.
As a group, women tend to get into fewer accidents, have fewer driver-under-the-influence accidents (DUIs) and most importantly less serious accidents than men. So, all other things being equal, women generally pay less for auto insurance than men. Of course, over time individual driving history for both men and women will have a greater impact on what they pay for auto insurance.

The car you drive.
Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car itself is major rate factor, the cost of repairs, and the overall safety record of the car. Engine sizes, even among the same makes and models, can also impact insurance premiums. Cars with high quality safety equipment might qualify for premium discounts.

Insurers not only look at how safe the car is to drive and how well it protects occupants, they also look at the potential damage a car can inflict on another car. If a specific car has a higher chance of inflicting damage on another car and its occupants, some insurers may charge more for liability insurance.

Your credit.
For many insurers, credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim. Credit-based insurance scores are based on information like payment history, bankruptcies, collections, outstanding debt and length of credit history. For example, regular, on-time credit card and mortgage payments affect a score positively, while late payments affect a score negatively.

The type and amount of coverage.
In virtually every state, by law you must buy a minimum amount of liability insurance. The state required limits are generally very low and most people should consider purchasing much more than the state requirement—the recommended amount of liability protection is about ten times the average state minimum. If you have a new or recent model of car, you likely will also buy comprehensive and collision coverage, which pays for damage to your car due to weather, theft or physical damage to the car such as being hit by a tree. Comprehensive and collision coverages are subject to deductibles; the higher the deductible, the lower your auto insurance premium. While there is no legal requirement to purchase these coverages, if you finance the purchase of the car or you lease it you may be required by contract.

Where can I buy insurance?

Where can I buy insurance?

You can buy insurance through your local insurance agent and through insurance companies that sell through their own employees, over the phone, by mail and over the Internet. Consult your state insurance department, the yellow pages of your phone book, and friends or relatives for the names of insurance companies doing business in your state.
In most states, there are dozens, sometimes hundreds of companies to choose from, depending on the type of insurance you're looking for. You can go to our Find an Insurance Company tool for help.

Compare all insurance policy before going to buy your insurance policy.There are many online sites like policybazaar.com which helps in choosing best insurance policy with good rates.



What Is Covered by a Basic Auto Insurance Policy?

What Is Covered by a Basic Auto Insurance Policy?


Your auto policy may include six coverages. Each coverage is priced separately.

1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.

2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.

3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.

4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.

5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.

Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.

Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.

6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.