Are we really going to lose our credit score?
We’ve been dealing with ongoing car issues, and our vehicle has been out of commission for nearly a year. Frustrated with paying $250 every month for a car we can’t use, we decided to return the plates. At the moment, we aren’t using another vehicle. When we called our insurance to cancel the policy, we were informed that if we get a new car, we risk losing all our coverage credit unless we pay an additional $200 to keep it on hold for six months.
Is this information accurate? What does it mean for us to start from scratch in terms of credit?
It sounds like you’re in a tough spot with your car situation. To clarify, when it comes to auto insurance, maintaining a continuous policy can impact your credit and insurability. If you cancel your policy and do not have another car insured for an extended period, insurance companies may view you as a higher risk, which can lead to higher premiums when you do decide to get a new policy.
When they mention that you’ll have “lost all your credit,” they may be referring to your insurance history rather than your overall credit score. Insurance companies often consider your previous coverage and claims history when determining your rates. If you’ve had a lapse in coverage, they might see you as a riskier policyholder.
When starting without credit, it means that you may have to pay higher premiums for your new insurance policy, or in some cases, you might face challenges finding a policy at all. You could also experience higher premiums when financing a vehicle, as lenders may charge more for individuals who have gaps in their insurance history.
If you’re considering getting another car, it might be worth paying to keep your current policy on hold, as it could help maintain your insurance credit and save you money in the long run. It might also be a good idea to shop around for quotes from different insurance companies to see what your options are.