CIBIL: How does credit score impact your insurance premiums?
CIBIL score, is typically inversely proportional to insurance premium. In other words, higher the credit score, lower the premium and lower the score, higher the premium. Impact on premiums: A high CIBIL score (indicating good financial history) can lead to lower insurance premiums, especially for car insurance.
Insurers view you as a reliable policyholder less likely to miss payments. Risk assessment tool: CIBIL score helps insurers assess your financial risk. A low score might suggest a higher chance of claims, prompting insurers to charge a higher premium to cover potential losses.
ALSO READ: Last-Minute Tax Planning: How Choosing the Right Life Insurance Policy Can Maximize Benefits Not the sole factor: While CIBIL score is important, insurers consider other factors like driving record, car details, and your age to determine the premium. Not applicable to all insurance types: The impact of CIBIL score is more prominent in car insurance. It might play a role in some other insurance products, but not to the same extent.
Potential for improvement: Individuals with lower credit scores may have the opportunity to improve their scores over time, which could lead to lower insurance premiums in the future. Paying bills on time, reducing debt, and maintaining a good credit history are some ways to improve credit scores. Maintaining a good CIBIL score can benefit you with lower car insurance premiums.
However, comparing quotes from multiple insurers is always recommended to ensure you get the best deal. Using credit card in a responsible fashion can show the issuer that you are a low-risk customer, thus making it more likely to approve a credit limit increase. If you make on-time payments regularly and also manage your credit
. Read more on livemint.com
