Your credit rating affects numerous life events. From purchasing a home, financing a car, and, in some cases, your employment opportunities are all measured with your credit history. 

One item that surprises many is your credit also affects your insurance premiums. Industry experts have proven that a strong correlation exists between credit history and insurance risk. A Risk Assessment Indicator is a code developed from and based upon credit report information. Insurance companies may use this indicator along with motor vehicle records, loss reports and/or other information to rate auto and homeowner insurance policies.

Information used may include things such as the length of credit history, late payments, and collections. Contrary to what you may think or read about Risk Assessment Indicators are not based on things like race, marital status, religion, nationality, age, gender, income, or address.

You can improve your indicator over time by using credit responsibly. A Risk Assessment Indicator is a snapshot of your insurance risk based on information in your credit report. It's a good idea to periodically obtain a copy of your credit report from the major credit bureaus to check for any inaccuracies.

If you find an error in your credit history, you should report the error to the credit bureau. The credit bureau must investigate and respond to your request. Once you are certain that your report has been updated, contact your agent.  The agent can re-order a new Risk Assessment Indicator and ask that changes to your premium be made retroactively to the original application or renewal date.

I recommend that if you need assistance with understanding your credit history or advice on using credit responsibly, you should contact a qualified credit counselor.

Make sure the information in your credit report is correct by reviewing your credit report from each credit bureau at least once a year. Call these numbers to order a copy (a fee may be required):

Choicepoint: (800) 456-6004

Equifax and CSC Credit Services: (866) 349-5183

When it comes to insurance, you want quality coverage from a solid, dependable company. You want the peace of mind that comes with knowing, in the event you need your company, we'll be there to help you get your life back to where it belongs quickly, compassionately and with as little hassle as possible. And you feel, rightfully so, that if you are a good risk, you should be rewarded with lower insurance costs. You want all of the above at the best price possible.

 Insurance companies are always looking for new ways to keep the cost of insurance affordable. A Risk Assessment Indicator is one of many ways that your rates are determined. So pay that credit card bill, auto payment, mortgage payment on time.