As if you needed an additional incentive to have insurance, consider this: Insurance may help keep your credit rating intact after an insurable incident. Insurance can't necessarily fix a credit rating, but it can preserve it by preventing debt and creating cash flow.
Preventing Debt
If you were to experience an insurable incident that ruined your property, such as a fire or theft, then you need to pay out-of-pocket to replace your property unless you have insurance. Without insurance, you may have no choice but to rely on credit cards and loans to fix the damage, replace property or pay for a place to stay while your home is being repaired. And if you tap into retirement savings, you may be triggering hefty fees and penalties that reduce the amount of money you can take.
This will increase your debt which can hurt your credit rating—not to mention the affect it can have on your overall net worth. In addition, it creates new payment due dates to observe while you are struggling to get your life back together. This creates the perfect breeding ground for late payments that can hurt your credit rating even more.
Improving Cash Flow
Cash flow is not just important for businesses, it's also important for individuals. You need cash flow in order to pay your bills on time and avoid late fees. But cash flow doesn't just prevent late fees; it also prevents a mark against your credit report due to a late payments.
One of the most important ways for would-be lenders to assess your risk as a borrower is to look at your payment history with other lenders. For that reason, timely payments to your credit cards and loans weigh heavily on your credit score. When you have insurance, you can ensure that you have claims money to use for replacing property and you don't need to use your own. That way, you keep your cash available for paying bills, avoiding late fees, and protecting your credit.
A good credit score is important, and it's also important to preserve your asset values by investing in insurance. Knowing that insurance can also keep your credit rating intact just makes it that much more powerful. When you are ready to build your financial armor through insurance, give us a call (512) 445-2727. Call us for an Austin insurance quote today.