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
A Trip Down Memory Lane with ‘Happy Days’
From The Fonz to “jumping the shark,” revisit the classic TV show that defined a generation.
Economic Indicators: What Fast-Growing Industries Tell Us
A look at the fastest-growing industries reveals what’s driving today’s economy and our priorities as a society.
Whole Life Insurance: Is it a Worthwhile Investment?
Confused about whole life insurance as an investment? We break down the unique benefits beyond a simple payout.
More Than Just a Car: The Joys and Benefits of Owning a Classic Vehicle
Thinking of buying a classic car? Discover why it can be a great investment and a fulfilling hobby.
Flood Insurance 101: Separating Fact from Fiction
Don’t get caught unprepared. This guide answers your top questions about flood insurance.
Decoding the Past: The Origins Behind Common and Curious Sayings
Unlock the hidden stories behind everyday phrases and discover the surprising origins of familiar sayings.
Essential Foundations: Five Things Your Small Business Needs Today
Setting up for success? Here are five non-negotiable elements for your modern small business.
Confronting Your Fears: Practical Steps Towards a Fearless Life
Tired of being held back by fear? Discover actionable techniques to confront and conquer your anxieties.
Lending Your Keys: The Hidden Risks of Borrowing Your Car
Borrowing your car? Understand the hidden insurance implications before you say yes.
The Shifting Sands of Homeownership: What Happened to the Starter Home?
The starter home is fading away. Discover the factors reshaping the first-time homebuyer’s journey.