How Credit Affects Car Insurance

Charles Goodman Group: Trustworthy Insurance Agents of Chappaqua

Auto insurance companies take many factors into consideration when determining premiums and whether or not to issue a policy. You are probably aware that these factors include your driving history, age, location and the type of car you drive. However, you may not realize that the vast majority of car insurance companies are also taking your credit scores into account. According to one poll, 92 out of 100 insurance companies use this information when determining insurance rates.

If you’re puzzled about why a Chappaqua insurance agent would be interested in your credit score, you’re one of many. Underwriting an insurance policy is about calculating the risk of a claim being filed in the future. It is a common belief that people who have bad credit are riskier to insure and more likely to file expensive claims. According to some reports, people with lower credit scores file 40 percent more claims than those with better credit ratings. Therefore, having bad credit might mean that you pay anywhere from 20 to 40 percent more for car insurance.

Does this mean your credit report is always pulled when you shop for car insurance? Not necessarily. Most insurers simply pull your credit score; they’re not concerned about the details of your report. In fact, they may not even look at your actual credit score.

The insurance agent experts at the Charles Goodman Group of Chappaqua can assist you with any questions regarding property insurance or automobile insurance.

They might just be taking into account your insurance score. An insurance score reflects a person’s overall stability. It’s affected by whether you pay your bills on time and how well you manage the credit you’ve been given.

There are many good reasons to improve a bad credit score. Before shopping for a new auto insurance policy, it may be worth it to take steps to improve yours. It can take time to see a significant improvement to a credit score, so start laying the groundwork early. While doing so, sign up for one of those credit monitoring services. Many times, they also provide information about your insurance score so you can have a very clear idea about what agents will see during the underwriting process. When your score finally falls into the decent, good or excellent range, you’re sure to see an improvement in the quotes you receive.

If you have bad credit, are you doomed to paying exorbitant premiums? You probably will pay more than some people, but it’s crucial to keep in mind that your credit score is just one part of a very complex equation. Insurance companies will take many other factors into consideration as well.