Your credit history is recorded by TransUnion and Equifax, Canada’s largest credit-reporting agencies. To get a better idea of your credit rating than you can get a credit report from either company. According to the Canadian Government’s Office of Consumer Affairs (OCA), a credit rating is a “snapshot of your credit history.”
Do Insurance Companies Use Your Credit History When Determining Your Premiums?
According to the Financial Services Commission of Ontario (FSCO) website, Canadian insurance companies are not allowed to use your credit history when determining how much you should pay for insurance.
James Daw from the Toronto Star wrote an article called, Credit histories abused, drivers say. It goes on to say that consumers had been complaining that their credit histories were being checked after requesting an insurance quote.
Randy Carroll, from the Insurance Brokers Association of Ontario, says that regulation prohibits insurance companies from using your credit report to underwrite your car insurance in Ontario. In 2005, the province passed Regulation 664, which bans the use of employment history, credit history, and credit rating when issuing insurance rates. Carroll said that they suspect credit ratings may still be used to exclude drivers from finding the most affordable coverage.
We don’t know whether that is the case or not but having a good credit rating is important for other areas of your life.
Ways to Improve Your Credit Rating
It’s uncertain whether the insurance companies are using your bad credit to underwrite policies but there are ways to improve your credit rating. Getting your credit history back on track will take more than a day but it is well worth it – not just for when you go to renew your auto insurance. Here are some tips for improving your credit rating.
1) Start paying back your debt. You don’t need a new television. You don’t need to go on vacation. It’s time to buckle down and start paying off your debt. Try the snowball method, as described by Dave Ramsay.
2) Get your credit report from TransUnion and Equifax every year to make sure it is accurate. If there are any errors in your reports then contact the credit-reporting agency to clear up the discrepancy.
3) Get a part time job to supplement your earnings or find a better paying job. Use those extra earnings to pay off your debt.
4) Start paying your bills on time, every single month. If you can’t afford to pay your television bills on time then cancel your cable. If you can’t afford to pay for your gym membership on time then cancel your gym membership. Our culture makes us think we need many things but the truth is that we don’t.
5) Sometimes a poor credit rating is due to the fact that you don’t have any credit. In this case you might want to get a credit card to use for some purchases. Make sure that you always pay your monthly bills otherwise you will find that you have a poor credit rating.
6) Cut up your high interest credit cards. Keep one or two credit cards but don’t bring them with you when you go out on the town. Try paying for everything with cash. It will give you a better perspective on where you’re spending your money.