You need motorcycle insurance when you hit the road on your bike. The right coverage can protect you and your wallet if a damaging incident occurs.
Your financial reputation plays a big role in how your insurer charges you for coverage. If you don’t have good credit, it may negatively impact your ability to maintain your coverage. Keeping a good credit score can actually help motorcycle owners when they buy insurance.
How Your Credit Affects Your Insurance Prices
Your credit score is essentially the confidence that creditors have in you to repay debt. Your score is more or less the numeric value of trust your creditors have in you. It ranges from 300-850, and scores over 600 are generally satisfactory. A lower credit scores may signal to lenders and other parties that you don’t have good control of your finances.
For example, if you take out a credit card, that card carries a credit limit. The more you use that card, the more of the credit you use. The credit expects you to repay the balance of the credit on the card. If you struggle to repay balances or accumulate large debt, this may drive your credit score down. This may make creditors reluctant to continue to issue credit. Among these concerned parties might be your bike insurance provider.
A low credit score might signal to the insurer that you don’t have the ability to pay for many damages to your bike. This may increase your chances of having to file a claim with your insurer. Furthermore, a bad credit score may show that you will not reliably make premium payments. Each of these factors are often red flags to insurers. They may increase your motorcycle insurance prices as a result of this higher risk. Indeed, some insurers may not issue policies for bikers with bad credit.
Why You Can’t Afford High Premiums
No one wants to pay exorbitant prices for their motorcycle insurance due to bad credit. If you cannot afford your coverage, you could run into trouble personally and legally. Think of some of the reasons that high premiums might affect you.
- You might have to reduce your coverage level to bare minimums to be able to afford your policy. You don’t want a lack of insurance to force more costs out of your own pocket should an accident occur.
- They might drag down your overall financial solvency. This may drive you into more debt or impact your ability to save money.
- Motorcycles are often riskier vehicles to operate than a standard car. They expose you to the elements, and require more expertise to control. If you have an accident, you might experience losses that you can’t afford without enough insurance.
Improving Your Credit and Protecting Your Bike’s Value
Nonetheless, there are things you can do to improve your credit. A better credit score will indicate a lower risk to many insurers. Improve your credit score, and you might be able to improve your insurance costs. Consider some of the ways you can improve your financial situation:
- Consolidate your debt. You might be able to apply for a personal loan or transfer your debt balances to one credit card. This may improve your credit score because you won’t owe money to multiple creditors. However, only do balance transfers with care. Carrying too much debt on one card might drive down your score.
- Pay your bills on time. This should include credit card balances, mortgages, vehicle loans, insurance and medical bills. You should always attempt to pay off the balance of every loan. However, if you can’t do so, pay as much as you can on the balance without putting your savings cushion at risk.
- Demonstrate that you are a good spender. Don’t buy recklessly and use up a lot of your credit. Remember, even though you can buy using credit, you still have to repay lenders.
- Yes, it is possible to carry too much credit. Therefore, don’t apply for too much more if you already have a lot of credit available. This may indicate to creditors that you have a risk of using your existing credit. This is often a red flag.
Additionally, you can take other steps through ownership of your bike itself to stabilize your financial reputation.
- Do not buy a bike you cannot afford. You will likely have to take out a loan to afford the bike. If you cannot maintain and repay the loan, this may mean your credit score drops.
- Finance your loan to suit your needs. Make sure you can always afford to pay the lender. Strike a balance between paying back the loan quickly without draining your pocketbook.
Finally, insure your bike using adequate coverage. Buying either too much or too little coverage could impact your personal costs. If you don’t pay your policy premiums, your insurer could cancel your coverage. Usually, driving without insurance is against the law.
Your credit score will likely play an important role in how you can get motorcycle insurance. Therefore, you should do everything you can to improve your credit. Nonetheless, always talk to your insurance agent about the ways they can help you get affordable coverage. You might qualify for discounts, better deductibles or other perks. Indeed, some insurers don’t consider credit scores when determining policy premiums. If you have poor credit, using one of these companies may be to your benefit. Call your College Park motorcycle insurance agent for more information 877.997.2478.