How does good credit affect car insurance rates?
Did you know that car insurance rates are based on your credit score? Most people are shocked when they hear that auto insurers use credit scores to help decide whether to cover drivers and what premium they should be charged. If you are like most people, it may be difficult to see the connection.
Why should you have to pay a higher car insurance premium because you had unpaid bills or some other financial problems in the past? Some customers who had never had an accident or violation were faced with sharply raised car insurance premiums when their renewal notices arrived.
In fact, auto insurers are passionate in their belief that credit scores are one of the best predictors of future car insurance claims. According to the American Insurance Association, here are some of the kinds of data from credit reports that are of most interest to insurers: 1. Payment history (any late payments?) 2. Bankruptcies 3. Collections 4. Credit history 5. Amount of outstanding debt 6. New credit applications
Solution? Know what is in your credit report. It is a good idea to run your credit regularly and monitor it for any inaccuracies. For more information on how credit affects you, visit: