Schemes like ‘buy insurance now pay later’ helps you meet your insurance requirements while offering a flexible premium payment model. During times of a tight budget, you may ‘get insurance now pay later’ options, as deferred premium payments help manage your cash flows more efficiently.
In addition to age, gender, driving history, occupation, etc., credit score influences the premium amount. A credit score illustrates the credit history of an individual and also determines their repayment capability. The score will be typically influenced by repayment history, debt availed, number of loan accounts, etc.
The Correlation between Insurance and Credit
An insurance company usually assigns an insurance score for illustrating the possibility of an insurance claim in the future. This score is based on the credit score and determines the amount of premium to be paid. A lesser score indicates higher risk and is backed with higher premium amounts. On the other hand, higher scores are usually accompanied by a lower premium amount.
Some insurers believe that insurance risk and financial stability are inversely related, i.e., a decrease in financial stability increases the insurance risk. The down payment, premium rates are thus influenced by the credit score.
However, it may be noted that a high credit score with a less impressive driving history may not vouch for competitive premium rates.
Improving Bad Credit Score
If your credit score is not sufficient, you can opt for schemes like ‘get insurance now pay later’ at competitive premium rates by taking some corrective measures, as illustrated below.
- Timely Payments – It is essential to pay all your bills on time. Delays get captured in your credit report and affect the credit score adversely. It is also necessary to retain consistency in the timely payment of all obligations. A proven track record represents good financial behavior. Your credit score is majorly influenced by your repayment records and should thus be clean.
- Lesser of Credit Cards – Having a reduced exposure in credit cards is beneficial as the insurance score takes these balances into cognizance. Paying down the credit card debt would help in boosting your credit score.
- Avoid Multiple Accounts – Opening multiple credit accounts indicates financial instability and is thus bound to decline the credit scores. You may seek credit only when indeed required. Therefore, it is essential to plan the need to have credit accounts prudently.
- Ensure Correctness – The lenders submit credit details such as repayment records, overdue, etc. to the credit bureaus. Your credit report and score get generated based on these details. Thus, being aware of human errors makes it crucial to verify all credit reports’ data. Incorrect details should be taken up with the respective authorities for rectification, resulting in a score correction.
- Consult the Expert – Everyone may not be skilled enough to manage his or her finances independently. However, given the importance of a well-managed financial portfolio, an individual may consult a financial expert for guidance. A financial consultation helps in understanding the gaps and taking corrective measures.
With an improving credit score, the insurance rates are expected to decline. Also, a deferred premium payment allows you to address and meet your current financial issues.
Even if you have bad credit, you should look out for various insurance providers and understand their offerings. Different insurers propose unique rates and deferments, which can be compared to make a better pick. Some insurance companies are known for high-risk underwriting. You may approach them to understand their policy features.
Despite a bad credit situation, you can get insurance now pay later schemes with various financial remedies. Just find the right place to buy this insurance and discuss the terms that work for you.