Bad Credit Affects Car Insurance
Bad driving, age, and where you live can push your car insurance through the roof. But, many do not know that insurance companies also take your credit score into account when quoting you a price. This might seem like an odd factor for your credit score to affect. Studies have shown that people with bad credit ratings file around 40% more insurance claims than those with high credit scores. There are over 92% of car insurance companies now taking your credit score into account. So, finding car insurance with a low credit score can be difficult.
It has become common follow for auto insurance firms to base premiums on your credit scores.
While it is true that low credit scores equal higher car insurance payments, the impact on payment cost is unknown. Different car insurance companies have different algorithms for establishing cost of car insurance. These algorithms are kept under lock and key. People with bad credit paying an average of 20% – 50% more than people with good credit scores for their car insurance. Hence it is clear that credit ratings are an important factor to insurance companies. This may not seem fair to good drivers with low credit scores. But it is not the sole factor for determining car insurance payments. All is not lost! If, however, you find that your credit score is significantly affecting the amount you are paying for car insurance, then you should be working on improving your ratings as quickly as possible.
Several firms can still check your credit per annum of policy renewal!
Car insurance companies commonly check credit scores, excluding only a few states. They are able to use this information as they please by using research. This indicates the likelihood of the company having to pay out when insuring drivers with bad credit ratings. Even in the world of car insurance, those with low credit ratings are considered higher risk and end up paying more.
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