Skip to content

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

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Want to learn more about our blog writer?

Read more about KayLynn's background.

Click Here

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

The First 5 Things to Do After an Auto Accident

These are the 5 key steps to take after an auto accident.

How Getting Married Changes Your Insurance Landscape

Marriage Changes Things…Including Your Insurance.

Is My Insurance Company Out to Screw Me?

Unsatisfactory Experiences Happen in Every Industry. Insurance is not Exempt.

When Should I Drop Comprehensive Coverage on My Older Car?

If You Have an Older Car Dropping Comprehensive Coverage Can Be a Smart Idea

Having Food Delivered to Your Home? There May Be Liability Risks

Having supper delivered to your door sure can be convenient, but it also can increase your exposure to a liability claim in a slip or fall. Here’s how to ensure you are covered.

It’s Time to Start Adulting: Getting Life Insurance When You Graduate

Getting life insurance when you graduate will help cover any car loans, credit card debt and even your student loans. Learn why life insurance is a good step in adulting.

Are “Acts of God” a Thing When it Comes to Insurance?

What are “acts of God” and will you be covered in the event of one? The answer is yes, no and maybe. Read our article on “acts of God” and how you may or may not be covered by these perils.

Preexisting Conditions and Insurance

Learn why pre-existing conditions play such an important role in the insurance industry. Know when and how you will, and will not, be covered.

Buying a Car? Why You Should Call Your Independent Insurance Agent First

Price, fuel costs and financing aren’t the only factors involved in the total costs of owning a vehicle. Your insurance premiums will play a big role which is why you should contact an independent insurance agent prior to purchase.

Beware the Backyard Trampoline

Are you sure your homeowners’ insurance policy will cover you in case of an injury or liability claim resulting from your backyard trampoline? Check before you risk it all for a little backyard fun.

Leave a Comment





Translate »