Are you looking for a way to decrease your insurance premiums? Obviously, driving carefully and taking steps to prevent damage to your car is going to help you keep your rates down. At the same time, you can also help lower your car insurance rates by taking steps to improve your credit rating.

The Credit Rating Connection

Believe it or not, many insurance companies look at your credit rating as a means for determining your level of risk. This is because some research has shown that people with a low credit rating are more likely to bet involved in accidents. Therefore, if your credit rating is low, the insurance companies consider you to be at a higher risk of being involved in an accident and will increase your rates.

Cleaning Up Your Credit Rating

There are several things you can do to help improve your credit rating. Obviously, you need to make certain to pay your bills on time. Making a late payment will really hurt your credit rating and make your score drop. Similarly, you need to take care to avoid going over the credit limit on your credit cards, as this will also make your score drop.

When it comes to credit cards, you should also avoid using your entire credit limit. When your debt to credit available ratio becomes low, you become a greater financial risk because you are more likely to have difficulty keeping up with your bills. Oddly enough, it is actually better for you to have your debt spread out over several credit cards rather than all on one card. Ideally, you should keep the amount of debt on your credit cards to below 30% the amount of your credit line.

If you have a really poor credit rating, you might need to apply for a secured credit card in order to increase your credit rating. With a secured credit card, you actually send money ahead of time to the credit card company and you then access your money with the card you are provided. These cards tend to have a number of fees associated with them and can be a bit costly to have. After awhile, however, using one of these cards will help improve your credit rating and you can apply for a nonsecured credit card. In order to get an credit rating improvement, however, you need to make sure the credit card reports your activity to the major credit reporting bureaus.

Finally, be sure to check your credit report every year. You are entitled to get a free credit report each year, so take advantage of that right and check over your report to make sure there are no mistakes. Even a simple mistake regarding the amount of credit you have available can have a negative effect on your credit score. By boosting your credit rating, you may be able to enjoy lower insurance premiums as well as better interest rates on credit cards and loans.

About the Author:
Shannon Kietzman is a freelance writer and an authority on car insurance issues. She helps others learn the basics of car insurance so they can make proper and informed decisions when choosing the coverage that is right for them.

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