Your credit report can affect your insurance rates

As if you needed another reason to keep your credit report crystal clear, buying insurance is a good one.

An insurance company is like a creditor in that they estimate the risk for each new customer. Where your credit score helps determine the interest rate you can get on a mortgage, your credit history is used to help determine whether the company will underwrite your policy and your premium rate. This is called insurance credit scoring.

Insurance companies view your report to judge how likely you will be to file multiple claims, make payments on time, and keep continuous coverage. Some states do not allow this practice.

If your State allows it, better your chances of lower premiums by obtaining a copy of your credit report and do what you can to clear any errors or inaccuracies. Then shop for several quotes, as each company has its own scoring policies. The difference in quotes can be drastic.