Does My Credit Affect My Auto Insurance Premium?
Despite the loss of your job, you have tried desperately to maintain all your credit accounts in good standing. There were a few months of late payments, but courtesy of a new position you have finally caught up. Unfortunately you have just received your 2009 bill for your car insurance policy and you have noticed a steep increase in your costs. Your credit score has negatively affected your auto insurance premium.
When it comes to borrowing money, like in a loan, mortgage or even a credit card, your credit history affects the type of interest rates you will receive. The same is true for your auto insurance rate, as your credit does affect the premium you pay. It may not make sense, but viewing insurance through providers could make it easier to understand auto insurance premiums.
The laws of auto insurance are determined locally, by the state you reside in. Based on where you live, the auto insurance providers examine a list of criteria to determine whether or not you are a high-risk driver. Conditions such as your driving record, the make and model of your car, past history of insurance claims and your age can all affect the amount of money you will be charged for auto insurance. Additionally, insurance companies believe that you are more likely to pay your premium if you have a higher credit score, and that the more financially stable a person appears on paper, the less likely they are to have an accident and file claims. You can check your credit report for free online at Go Free Credit to see if you are in good standing for a strong insurance rate.
In states that allow it, auto insurance companies will use your credit history to determine if you are a responsible driver. The more responsible you are, the less you will have to pay. Consequently, the worse your credit history not only do you risk having to pay higher your auto insurance premium rates but you may get denied coverage altogether.