We all know that you need to have a good credit score to request for a loan. But, will your credit score affect your insurance score, and thus your car insurance in any way? Now, many will admit that they had no idea about this, so, this article will not require any pre–requisite knowledge. So, let’s get started with the system of car insurance in India and answer the question of how to check the credit score.
The first question in your mind would what exactly credit score and insurance score mean. Credit score is a three-digit number lying between 300 and 900. This number is an identity card of your financial fitness that is how likely it is that you will repay your debts. It is calculated on the basis of your credit history and several other things. As for the insurance score, it is a score that tells the insurance companies about how likely you are to have an accident or an insurance claim in the future. It is very simple to understand that the lower your insurance score, the lower would be the price of your insurance policy. Now, some may not like this system at all but for insurance organizations, this prevents a lot of losses.
The car finance system in India is also quite similar. The insurance score evaluates using a thorough analysis of your credit history, and your accident and insurance claim history. Returning to the main point, will your credit score affect your car insurance score in India? Technically and lawfully, the answer should be no to a large extent. But, things are not always as good as they appear to be. Some insurance companies tend to use the credit score as your insurance score, and your insurance policy changes accordingly. So, the higher your credit score, the lower would be your insurance score, and you are on the safe side of about everything. But, what is a good enough credit score?
According to experts, for car finance in India a score above 700 is considered to be fairly good. But, going by the results of various surveys, it is fairly possible that a person doesn’t even know his/her credit score. So, here is a quick list of steps you should follow to get a good credit score. First of all, get a free credit report from your bank and check for any errors like late payments or debts. Make a habit of paying off debts on time. Regular payment of bills also helps in increasing your credit score. And, above all, spend wisely. If you spend money in a pre-decided manner, then you may not even have to take a loan, and you can enjoy a high credit score. That’s all for now on things you should be aware of, before getting car insurance in India.