How Does Your Credit Score Affect Insurance Costs?

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In the past, a bad credit score mainly kept you from getting a mortgage or a low finance charge on a loan. While that is still true, a person’s credit score has become a factor in qualifying for a cell phone contract or even an apartment rental. Potential employers can legally request your credit score before hiring you, and insurance companies can base your premiums — high or low — on your credit score. In fact, many home and auto insurers have changed their pricing models in recent years to include consumer credit scores as a factor in determining insurance premiums (except in Massachusetts, Hawaii or California, where the practice has been banned). Though this may sound somewhat surprising, this method of pricing provides yet another example of how your credit score can affect you in many facets of your daily life.

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Credit Q&A: Debit and Prepaid Cards

There’s no shortage of information available about best practices for managing your credit. Unfortunately, some sources are less reliable than others, and some “facts” have been distorted into widely believed misconceptions – like financial old wives’ tales.

Here is a commonly asked credit-related question and answer that will put you on the right track for sensible credit management:

Question: Does using a debit or prepaid card improve my credit score the way responsible credit card use does?

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