Auto Insurance and Your Credit Score – Did You Know?
Many years ago your credit score didn’t have an impact on your auto insurance premiums. Now however, it actually means how you live your life! And yes, this includes how much you pay for auto insurance. When you apply for auto insurance, the first thing the insurance companies do, after you complete their application, is run your credit. If your credit is bad to really poor, your premiums will be anywhere from $100.00 to $500.00 per year higher than someone who has a very high credit score.
Your premiums are based on first: your credit, second: your driving record. You would really think that a persons driving record would be more important. Most insurance companies however don’t look at it that way. If your credit is bad, not only are your premiums higher, but some of the larger insurance companies won’t even touch you. Then you are forced to go through the sum-prime insurance companies. These companies are not only higher in premiums, they also want a very large down payment. The monthly payments are also very high.
The problem is that when you have to pay such high premiums for having a bad credit score, you are spending money that could go to correcting your credit problems. Keeping your credit history clean and your credit score high is very very important to ensuring that your automobile insurance premiums stay low. Even people who are affected by a low score through no fault of their own, for example; laid off of work or an illness which affected their ability to completely pay their debts are affected by being charged higher premiums. This is due to the fact that most creditors, even though they work with you, still report you as being late.
Keeping up with your credit is extremely important, if you want to maintain lower automobile insurance rates.