There are certain times in life when you just feel the need to splurge, just that one time and you have all the justifications for doing so. It may be a difficult job well done, or an aced exam, or just about anything that calls for a celebration, and the celebration with yourself is done with a nice blowout and an expensive purchase – charged on your credit card. Because this was a ridiculously expensive purchase, you naturally can’t pay it right away and your credit report starts to deteriorate from here onwards. You will probably correct this aberration in a couple of moths and your credit report will once be in good shape again.
Fast forward to several years after and you are applying for, say, a home insurance. Your home insurance agent quotes a high premium cost and cites your credit report as the cause of high premiums. You don’t believe your ears, no, that can’t be happening! It was just one time and you have been good before and after that and you have even managed to erase and correct that spike long ago. Can it really hunt you after all these years? Yes, it can. Insurance companies do not only look at your present credit standing but at your credit history. A spike in your expenditures sometime ago which resulted to temporary bad credit standing will still be reflected in your credit history. Though some insurance companies may ignore this, many will still tend to be conservative and list you as a potentially higher-risk customer (as opposed to someone with a more consistent spending pattern). What you can do then is scout around for other insurance companies who can give you better rates. These policies vary from one company to another and since you can no longer change your credit history, then you just have to look around for a more liberal insurance company.