How your credit score influences the price you pay for life insurance.
Life insurance is one of those policies that most people can’t afford to skip out on. Since coverage is designed to ensure your loved ones are provided for financially when you are no longer around, it is a selfless and caring policy to secure. Along with your health history, insurers look at a multitude of factors when determining your life insurance rate. One of these factors is credit history. Before you apply for a life insurance policy, it is wise to take a look at your credit report.
Your credit history gives insurers a snapshot of how well you have managed your finances. Insurance companies tend to look for red flags that indicate you are too much of a risk to insure. After all, they are looking at your profile to determine how much risk you pose so that they can match premiums accordingly. If you have a lot of debt or you have missed several credit card payments, it could signal that you are not on top of your finances. Generally, bad credit will not hurt your chances of qualifying for life insurance, though.
While late payments can be detrimental to your score, some things – such as charge-offs, accounts in collection status, bankruptcy, and foreclosure – can do even more damage. If you have any of these delinquencies on your credit report, you could expect to pay higher premiums overall.
It is possible that bad credit is the result of errors in your report, rather than poor money choices. Before you start shopping for life insurance, it is best to take a look at each of your credit reports to check that there are no errors and inaccuracies.