Why Does My Credit Affect My Car Insurance Rates?
Why Does My Credit Affect My Car Insurance Rates?
You are probably well aware that a variety of factors can impact your car insurance rates. Factors include your age, driving record, where you live and the make and model of the car you drive. There is another aspect of your everyday life that can have an effect on your car insurance rates. That is your credit rating.
What? Why would a driver’s credit rating affect their car insurance rates?
First, you should understand that using a credit score to help determine car insurance rates is not new. It is a practice that has been ongoing for over two decades. The practice is a result of two studies, one from the Federal Trade Commission (FTC), that shows there is a correlation to a person’s credit score and how expensive that person can be to insure. In other words, the lower a person’s credit score, the more likely they are to file a claim. Not only are they more likely to file a claim, but the claims they file tend to be larger.
Insurance companies also prefer to insure people who keep their policies for long, uninterrupted periods of time. Struggling to maintain good credit may be an indication they are more likely to let a policy lapse. This also can make it more expensive for a company to insure such a person.
The difference between auto insurance rates with very poor credit and very good credit is not insignificant. Surveys have shown those with excellent credit can pay two or three times less than those with poor credit. That can make improving your credit score extremely worthwhile.
In reality, your credit score affects many areas of your life. It will impact your ability to get a loan and how high of an interest rate you will pay if you do. It may impact you if you qualify for an apartment or even certain jobs. it may also impact the price you pay for your auto insurance.
If you are paying too much for car insurance, work to improve your driving record and your credit rating. You can also contact one of our independent agents. We will shop for you, comparing insurance rates from a variety of providers. We’ll seek out discounts you may qualify for. We’ll get you the coverage you deserve at a price you can afford.
Do you have questions about your insurance? Find an insurance agent near you with our Agent Finder
Search All Blogs
Search All Blogs
Read More Blogs
October Driving Prep: Get Your Car and Your Policy Ready for Fall
A guide to preparing your car and auto insurance for the fall season.
The October Home Check-Up: Securing Your Home for the Fall Season
A guide to fall home maintenance and home insurance review for the month of October.
The Wanderer’s Playbook: The Art of Traveling on a Budget
A practical guide to finding and saving money on travel adventures.
The Entrepreneur’s Toolkit: From Startup to Success, Insuring Every Step of the Journey
A phase-by-phase guide for entrepreneurs on the essential business insurance policies they need.
Beyond a Payout: How Life Insurance is a Living Financial Tool
A guide to how life insurance can be a living financial tool, with a focus on its cash value component.
The Driver’s Playbook: How to Maximize Your Auto Insurance Benefits
A playbook for drivers, revealing key policy benefits and strategies to get the most from your auto insurance.
Beyond the Big House: Uncovering the Hidden Value in Home Insurance
A deep dive into the valuable but often overlooked components of a home insurance policy.
The Thrill of the Grill: A Masterclass in BBQ Perfection
An ultimate guide to mastering grilling and barbecue, with tips, techniques, and delicious recipes.
The Entrepreneur’s Armor: A Guide to Protecting Your Business
A crucial guide to business insurance, covering essential policies and strategies for entrepreneurs.
The Gift of Security: A Simple Guide to Life Insurance
An easy-to-understand guide to life insurance, explaining policy types and a simple way to calculate your needs.