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Your Credit Score and Car Insurance Rates

Credit score and insurance

Does a Low Credit Rating have a Negative Effect on Car Insurance?

The importance of credit scores and credit history cannot be overlooked. Both your credit score and history play a huge role in your borrowing capabilities and interest rates. However, did you know that your credit score also plays a factor in securing your car insurance rates?

You might be surprised to learn how it does.

Your credit score is based upon details found in your credit history. Insurance providers may review your past history and assign you an “insurance score” that will estimate the likelihood of filing a future claim. Calculating your insurance score is pretty straightforward; insurance companies look at your payment history and the amount of debt you carry. Insurance companies will also take note how many lines of credit you have in good standing and how long each account has been open.

One of the pitfalls of an “insurance score” is their configuration in determining the calculation. The types and numbers of claims from others in your credit range will help determine your insurance score. This makes it difficult to control or even predict how much you’ll pay for auto insurance. These calculations, in short, are based more upon trends with those that share a similar credit score.

You may be wondering how you can attempt to control or influence what can’t be controlled or influenced in regards to your score. However, there are simple ways to help position yourself in order to attain these lower rates. One suggestion would be to start checking your credit activity regularly and dispute anything that looks suspicious. Make sure you don’t miss any payments or carry any excessive debt. Over time, these habits may help keep your credit-based insurance score high and your premiums low.

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