Auto Insurance Affected By Credit

Many people want to know why credit scores have anything at all to do with your car insurance rates. They say that whether they pay their bills on time has nothing to do with their car insurance; in fact, some places have already made it illegal for an auto insurance company to take a person’s credit score into consideration when offering auto insurance.

The credit score that the car insurance companies use when determining your rates is actually different from the one that creditors use when determining interest rates or if you will even get the loan. Auto insurance companies look at how you handle your debt, whereas banks look at how much credit you have applied for recently.

Auto insurance companies have found a pattern among those that have lower to poor credit as applied to number of claims filed. They have found that the lower the credit score, the more claims they would file against their car insurance company. Plus, the more late payments you have is also directly related to the number of claims that would be filed. They are more concerned with you making claims than they are with you not being able to make your payments.

If you improve your score, you can reduce the amount that you pay on your auto insurance premiums. More and more insurers are looking more closely at credit scores these days, so anything you can do to improve your score will improve your auto insurance rate.

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