How Your Credit History Affects Your Car Insurance
Most people do not realize that their car insurance company will look at their credit score when determining a car insurance quote to give them. Insurance companies will do this while comparing it with your car insurance histories and driving records. Before determining your car insurance coverage, your agency will use your credit score to determine your overall insurance risk score. Though it may not being something pleasant to remember if you have a bad credit score, remember to keep it in mind when considering the type of car insurance quote you are hoping to receive in your search for coverage or to lower your premium.
You are probably wondering how your credit score and risk score will affect your premiums. Car insurance companies take into consideration the many studies that have been done correlating driving history and credit score. A "good driver" is typically found to be someone who has a good credit score and is not under a lot of financial stress. If your credit score is high, you will likely be seen as a trustworthy driver, and therefore less of a risk for the car insurance company to insure. According to studies, these sorts of people are also less likely to file an insurance claim. In addition, if you have good financial records, it shows insurance companies that you are able to handle your life in a responsible manner, also decreasing your risk score. People who have more financial troubles are often viewed as less responsible and will often receive higher rates when seeking insurance coverage. To the insurance company, this sort of driver is calculated as a higher risk. Insurance companies keep this in the front of their mind when creating your car insurance quote.
Credit is a very important factor when it comes to risk assessment calculations for car insurance quotes. Just remember that the lower your credit score the higher your premiums will be. Many people will experience some sort of financial setback or hardship. Some will have to file bankruptcy or make some sort of bad investment. Unfortunately, in these sorts of situations, you will be seen as a higher risk to car insurance companies. However, working to improve your credit score could also help you in eventually lowering your premiums, which change as often as every six months.
It is very important to know how your credit plays a role in your car insurance coverage. This will help you know what you expect when you inquire insurance companies about getting coverage quotes. It can also aid you in eventually lowering your premiums even further.