If you've ever thought that having a bad credit history will only make it more difficult for you to apply for a new credit card or get a mortgage, you'd better think again. Although it is not the sole criterion, insurance companies place significant weight on your credit history to determine your auto and home insurance premiums. So if you are the type of person who tends to be financially carefree, those unpaid debts or foreclosures from the past could rise up to haunt you.

Why is this? What does having had bad debts in the past have to do with how your home or auto insurance policy should be rated? Insurance companies are also businesses that need to protect themselves. That is why if your history shows that you were usually late in making payments and that you owed a large amount of debt, then it would be reasonable to assume that you just might carry those habits today and fail to make insurance premium payments on time. You would be seen as a risk and treated as such.

Even the number of times you have applied for credit (including credit cards and mortgage loans) could affect the quality of your credit history. Likewise, the number of credit lines you are using could make you look less desirable in the eyes of insurance companies. These and other factors could greatly influence the decision of an insurance provider on whether or not to underwrite you or quote you a rate that would be agreeable to you.

If, on the other hand, you have a lengthy credit history with little or no bad records, then insurance companies would tend to look favorably on you and reward you with lower premiums, assuming, of course, that you do well on the other criteria that they use to determine premium rates.

Here are a few tips:

First, clean your credit right away. Pay your credit card on time every month, consolidate and get rid of the high interest debt, and seriously control your spending.

Second, get copies of your credit score report from the three credit bureaus. A fast way is to get them online. Check the information on the reports to see whether they are correct. File Dispute on any mistakes with both the credit bureaus and the creditors involved.

Third, if you don't have much credit history yet, get some. Lack of credit history may hurt you just like bad credit does; to the insurance companies, you're an unknown quantity.

BlueWaterArticles.com: - How Credit History Affects Your Insurance Premiums

About the Author

Grace Navas is an insurance agent and regular contributor to Coverage4usa.com. Coverage4usa.com help people get free auto insurance, life insurance, home insurance, health insurance and business insurance quotes.