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Your Credit Score and Your Car Insurance

Trying to find the best car insurance for your needs can be a challenging task. Certainly, you understand that your driving record will have a direct impact on your ability to obtain car insurance at favorable rates. However, there are other factors that can play a roll in the type of car insurance you will be able to obtain and the premiums you will have to pay for that car insurance coverage. This article is designed to help you explore different aspects of obtaining car insurance and what can impact your ability to obtain car insurance coverage at favorable premium rates.

It is no secret that if you have a bad credit report it will always haunt you when you are trying to get a loan, or any type of credit for that matter. What many people donít know is that your credit report is also used to help insurance companies to calculate the cost of a policy.

Credit reports and insurance claim histories are both used to predict the likelihood of an accident occurring with a policyholder, in order to come up with a credit score. The lower the score the cheaper the insurance policies.

Credit scores are not the same thing as insurance scores; the insurance company uses the statistics of other policyholders, with similar credit histories to predict the likelihood of an accident occurring, or a claim being made.

Even though credit reports are used in determining an insurance policy, unlike banks or financial institutions a customer will not be declined insurance on the basis of them having a poor credit rating.

What a poor credit history or insurance claim history will mean is that the person wanting insurance may be charged more on their policies, as they are considered to be in a higher risk group, than those with a good credit rating and a good insurance claim history.

The best advice for those who have a bad credit rating, and wish to obtain cheaper insurance premiums, is to make repayments on already obtained credit such as mortgage or car payments on time.

Avoid trying to apply for too many credit applications all at once, and make sure that you are not using all of the credit that is available to you. Practicing these methods of good credit behavior is also a good way to get a better insurance policy.

By keeping these pointers and suggestions in mind you will be able to bring a better sense of order to your financial house. In addition, you will be able to obtain car insurance at a far more reasonable premium rate.


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