By John Ziegler
Similar to other industries, a good credit score can mean lower insurance rates, and a lower credit score could mean higher monthly payments.
While your credit doesn’t come as much into play with your health insurance rates as it does with auto or homeowner insurance, it’s still an important factor affecting how much you will end up paying over time.
Here’s how your credit score affects your health insurance rates:
Your Insurance Score
Insurance agencies look at your credit score to see how much of a cost risk they believe you are and give you an insurance score based on the information that they find. While insurance companies won’t deny you a policy based on this data, it will most likely determine your monthly rates.
Typically, they are looking at two main criteria: your payment history, and your total debt. They want to know if you pay, if you pay on time, and if you are financially stable enough to pay for unforeseen or expected expenses. They will most likely be looking more closely at those payments related to any health expenses.
Payment History, Total Debt = Insurance Score
Most insurance companies also operate under the belief that financial health has an affect on long-term physical health. If they see you have a great credit score, this may also suggest to them that you are less likely to suffer from illness and poor health and are therefore a lesser financial risk to them – resulting in lower rates.
When Credit Doesn’t Come Into Play
Your credit score may not come into play if you are covered under an employee group plan, in which premiums are automatically deducted.
Also, if they do not receive access to your credit score, they may automatically charge you higher premiums.
Once they have your credit score, however, they will have it forever and can use it as they please to check whenever they want.
What You Can Do
Not all health insurers use the same standards to determine your rate, so regardless of how high or low your credit score is, remember to shop around in order to find the best plan for you. Even savings of just $20 a month can add up quickly.
The best way to make sure your credit doesn’t hurt you is to try and keep your score in good health. Paying your insurance premiums on time and using installment plans in a timely manner can go a long way in the eyes of an insurance agency checking your credit score. When it comes to health insurance, your rates will most likely reflect your health-related payment history.
FinPay can help you with multiple payment alternatives, such as automated installment plans and consumer medical loans, to help you make your payments on time.
In order to save yourself money down the road, make sure you are doing everything possible to keep your payment plans in the best shape possible.
John Ziegler, CFO of FinPay, LLC, has more than 20 years of senior financial leadership experience and has structured and negotiated over $400 million in business. Mr. Ziegler is committed to lending clients his extensive knowledge of effective risk management and benefit strategies.