Auto Insurance and Your Credit Score

The North Gilbert Breeze recently had a very good article written by Keith R. Nelson, an associate at Rowley Chapman Barney & Buntrock, Ltd. The article appeared under the “Law Talk” section and discussed how not having Medpay in your automobile insurance can adversely affect your credit rating should you be involved in an automobile accident. Keith cites the manner in which insurance companies are stalling in making payments on claims in this difficult economy. What this does is then cause you to have to pay for your bills up front as you wait for your insurance company to send you the payment. Well, if you can’t cover these costs in a timely manner then it can severely affect your credit. The solution is to sign up for Medpay in your coverage. Here is how he explains these concepts:

Medpay is coverage that provides money upfront to help pay accident related medical expenses, co-pays, and other non-covered out-of-pocket medical expenses resulting from an automobile accident. Along with providing immediate payment to medical providers, medpay also provides the peace of mind that credit ratings will not be ruined simply because of an auto accident. If you have recently cancelled your medpay coverage or have never had medpay, please contact your automobile insurance provider for a price quote.

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Check out the full article for more information.

Errors on Credit Report Can Cost You a Boat Load

Believe it or not credit reports do contain errors. I don’t think any error on your credit report should be considered minor. Because errors in your report can significantly alter your credit score and end up costing you thousands of dollars in the form of higher interest rates, inability to refinance a loan etc. Additionally, there is a growing trend where employers, vendors (if you’re self employed), new business partners etc. are checking your credit before they decide to establish a relationship with you. So, it is ever more important that you diligently monitor your credit report and actively correct any errors you find!

If my long winded advice here doesn’t convince you then read the story of Mark S. Blythe. According to the Orlando Sentential, “Mark S. Blythe’s loans fell through and his business went on the skids — all because a computer glitch spewed bad information on his credit file, sending his credit scores into a free fall.”

The complete fallout of this error is mentioned later in the article:

Blythe’s credit file, in particular, was spammed with several loans he had never taken out with the former R-G Crown and a delinquency record that included 19 late payments. Bank officials said they acted immediately to restore accuracy to the customers’ credit files in early December. But Blythe said he continues to suffer financial fallout long after the bank claims the problem was solved.

“I’m fighting to survive,” he said. “First, my credit scores were trashed and my business came to a halt. Now, my line of credit has been cut off and that’s the last thing I have to operate with. All of this has happened because Fifth Third has not really fixed the errors they reported.”

So, be vigilant. Check your credit report once a year and review it for accuracy. Make sure EVERYTHING is correct. Contact the creditor if you find any errors. Ask them to correct it immediately. Keep track of the dates of your conversation in a log book. Follow up in 30 days.

Mistakes happen. But you and only you are responsible for making sure your credit is in right order. Getting upset with the mortgage loan officer when you urgently need to refinance your home would not be the way to go about solving this problem.

Related posts on Arizona Mortgage Guru for this topic:

Maintaining a US Credit Report While Living Abroad

Your credit profile and ability to obtain future financing is the last thing on your mind if you’re planning on living abroad for a few years. Many Americans simply pack their bags and go off on their adventure without much thought to how this may impact their credit profile. However, once its time to move back home and you want to purchase a house your spotty credit profile can be a big obstacle. This is especially true if you end up living abroad for more than three years.

I have family in this exact same situation so I’ve given this matter some thought. A borrower whom I recently worked with has provided me with an exact idea of how to balance your desire to live abroad and still maintain a foothold in the US credit markets.

The first thing you should do is open a Post Office Box in your home town. Then change all your credit card mailing addresses to this PO Box. This is fairly inexpensive. I’ve obtained PO Box quotes for as low as $10/month. Then, arrange with the PO Box provider to forward all your mail to your address abroad on a regular basis.

There is a problem with this strategy if you’re a paper bill kind of person. However, to pull this off you need to begin making all your credit care payments online – before receiving your bill. This is because you could receive a bill (after forwarding) a few months later.

I suggest you keep four US based credit cards open during your time abroad.
Use these cards once a quarter or every six months for a minor purchase (such as gasoline – although in Europe this may not be a minor purchase, considering gas prices). Then clear the bill in the following billing cycle. This maintains activity on your account and demonstrates that you’re making timely payments.

This level of diligence will pay off when it comes time to move back home to the United States. Any mortgage lender will be able to run your credit score with your PO Box address. You may need to provide an explanation of your residence history for the past two years, but that is pretty easy to do.

It’s exciting to have the opportunity to live in a different country for a few years. Many Americans chose to move back after a few years. And when that time comes its better to be prepared than not, believe me my in-laws wish they had done it!

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.