It is not uncommon for insurance agencies to raise rates when risks are higher. Many auto insurance companies use credit scores to determine risk. A correlation exists between those who have a positive score and those who safe drivers.

If you have a poor credit score, working to improve it can be a good thing. It may help lower your car insurance costs.

But, how can you build up your credit? Here are a few tips:

#1: Check Your Credit Report

Every American can get a copy of their free credit report from each of the three credit bureaus every year. Check yours. Then, look for errors. Are there accounts reported late? Do you have accounts listed that are not yours? File a dispute if you find errors. Sometimes, asking for too many credit reports might cost money. Therefore, only do so with discretion.

#2: Work To Pay Your Debts On Time

Making payments on-time is the single most important thing to do to raise your interest rate. Creditors want you to make payments on time every month. Use auto payments set up in your credit card accounts to do this. Or, mail your payments a few weeks early.

#3: Pay Down What You Owe

Keeping your credit card balances low also helps with your credit. The more of a gap between your credit limit and your balance, the better. Keeping your credit low does not have to be overwhelming. Try to make payments higher than the minimum balance each month. If you can make a full payment, do so.

#4: Don’t Open Too Much New Credit

Every time you receive a hard inquiry on your credit report, it can reduce your credit score. This includes any time you request a line of credit or open an account. These will drop off your account after two years. However, opening too many may make you seem as though you are desperate for credit.

#5: Use More Than Just Credit Cards To Establish Credit

The more types of loans you have, the more responsibility you show. For example, if you have a vehicle loan or a mortgage, this helps show you have a variety of types of accounts.

Most importantly, be aware of your credit report. Your auto insurance rates could rise if your score drops. You can avoid this outcome by budgeting, paying bills on time and using your credit responsibly.

Car insurance rates can come down as your credit score improves, too. Be sure to ask your Long Beach insurance agent about this if your credit score begins to rise.