Suze Orman just said pay off store credit cards and do not close them -this will lower your car insurance. Should my son open store credit cards and pay off the balance right away just so maybe his car insurance be lowered? And why does car insurance companies care about your credit card fico score anyways? He’ll be 21 in a couple months ; hoping the insurance will decrease.
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February 24, 2010 @ 2:52 am
I highly doubt a 21 year old boy is going to have his car insurance reduced by enough to run out and try to get a store card. Does he have tickets/points on his record? Insurance for young men in his age range until they are 25 is usually pretty high. Talk to your insurance agent perhaps and ask him if he knows about this. Also, maybe shop around and see if rates have come down for him? The reason FICO scores may be used to determine rates is because if someone is negligent in paying their bills, they may not pay their premiums on time or they may be negligent in other areas of life. That is why a lot of employers also run your credit report and if it’s a professional job it may hurt you if you have been careless.
February 24, 2010 @ 3:01 am
Some (not all) insurance companies use credit scores as part of the process for determining your insurance rates, but from the instances I have personally seen the credit score has a rather small impact on the premiums.
I believe that many states are attempting to pass legislation that would prohibit this as well, so keep an eye out for that.