How does your credit score affect car insurance rates?

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In a nutshell...
  • No matter what your age or past credit is, many car insurance companies will run your credit score when qualifying you for a policy
  • The bottom line is that car insurance companies base your rate on the amount of risk you pose and its really that simple
  • Male sure you get at least two to three quotes to make sure you are getting the best rate

The importance of your credit when it comes to buying a house, a car or even get approved for the best car rate is an understatement. No matter what your age or past credit is, many car insurance companies will run your credit score when qualifying you for a policy.

Although many people will receive a policy without question (especially when they show a clean driving record) they may not realize that the amount they are quoted has to do with their credit.

If you’re concerned that your poor credit is resulting in high premium costs, there are some things you can do to improve the price you pay, and what questions to ask so that you make the best out of your situation.

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Why do car insurance companies use your credit score?

There is a big debate over which companies use your credit score and which don’t when it comes to determining your car insurance rates.

Although not every big or small insurance company, the reality is that the majority of them do.

No matter how responsible of a driver you are, credit matters to car insurance companies and tells them something about you, just as your driving record and years of experience as a driver does.

The bottom line is that car insurance companies base your rate on the amount of risk you pose and it’s really that simple.

They don’t care about much else, such as your age or what you like to do in your personal time but instead, how responsible you are on the road and the amount of risk you pose to other drivers.

If you have a low credit score, it has been proven that you have a higher risk of filing a claim than a driver with a good credit score.

How many car insurance companies use credit scores?

According to a survey by Conning & Co., which researches car insurance companies, 92 percent of auto insurance companies use credit information as a factor in calculating premiums.

However, your credit score isn’t the only thing to hold you back or move you forward with your policy.

Overall, your driving record matters most and will always take the forefront when it comes to how risky of a driver you are.

Do you practice safe driving on a daily basis and have a driving record clean of DUI’s and major traffic violations? Your credit score isn’t discriminatory and doesn’t rate you on anything but your financial data.

You are never “singled” out by your gender or race but instead on how many marks you may have against you from past or present debts, etc.

If you are concerned with the current state of your credit score, there are some things you can do to help improve your rate for future car insurance policies.

Begin by paying your bills on time and work on minimizing your credit credits as much as possible.

It’s always important to keep track of your credit score and since many organizations have the ability and right to determine your premiums based on your credit, it’s a good idea to stay on top of it on a monthly basis.

By getting in the habit of checking multiple credit companies and comparing your score, you can work to eliminate any incorrect debts that may have accrued or monitor the correct debts you have by slowly paying them back.

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Although many car insurance companies will use your credit score when qualifying you for a policy, not many people are turned down.

In fact, credit scores are a handy way for insurance companies to open up opportunities to many people no matter how good or bad their credit score is.

Just remember that one of the most important things you can do to find the best car insurance rates is be a good driver and keep your record clean and free of at-fault accidents.

There are important rights you have and as most car insurance companies will look into your credit it’s handy to know what they are able to base your car insurance rate on and what they are not.

If you get the feeling that your insurance company isn’t treating you with a fair quote, such as judging you based on your religion, race or gender know that this is illegal.

They can’t base your car rate on how much you make, where you work or what your sexual orientation is either.

Knowing the facts, you can move forward and take more control of your experience with car rates than ever before. Compare car insurance companies today with our free quote tool below now!

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