Importance of Credit Counseling: Credit Scores Tied to Insurance Rates

MSN Money recently highlighted how credit scores can influence multiple aspects of a person’s life. The problems can range from higher interest rates to higher insurance rates. MSN Money adds that “bad credit is costly” and can quickly make things more difficult to manage for people already struggling with other issues.

One of the ignored influences of credit scores is the large impact they have on insurance rates. MSI Credit Solutions recently posted an article that explains 92 percent of the time the rates are influenced by the credit scores. The company mentions that bad credit can cost a person an additional 20 to 50 percent for insurance. MSI also adds that “most consumers do not know how their credit really affects their lives,” and this idea is confirmed by MSN Money. The Federal Trade Commission explains that an increasing number of businesses and organizations are relying on people’s credit scores to determine how much to charge them, yet many are still not aware of this happening.

The link between credit scores and insurance rates has been the topic of potential legislation in the past, but the rules still allow insurance companies to use them. Consumers need to understand how the scores can impact their lives, so credit counseling is important. MSI points out, “Credit issues can be resolved through education on how credit really works, guidance on how to use positive lines of credit, and credit restoration.” Although most people know that they need to check their credit scores, they rarely realize how to fix bad credit or see the signs of how it influences how much they pay for insurance and other aspects of their lives. This is why credit counseling is helpful in many situations that require a better understanding of the situation.