Home » Auto Insurance » Why Does My Credit Score Affect My Auto Insurance Rates

Why Does My Credit Score Affect My Auto Insurance Rates

If you have ever shopped around for car insurance, you probably already

know that there are a number of factors that affect the rates you will be

paying. Age, experience, and the type of vehicle you drive all seem like

reasonable criteria, but what about your credit score? Whether you are

aware of it or not, your credit rating in most cases does affect your insurance

rates; knowing your credit rating and what it means for your rates makes it

easier for you to get the best deal.


How Does My Credit Score Affect My Insurance?

We all know that your credit rating can affect your ability to get a loan or

purchase a home, but how your credit score affects your skill as a driver may

not seem apparent—because it does not. The use of credit ratings as criteria

for insurance premiums is a controversial topic, and the decision of insurance

companies to include them is not fully understood. Your best strategy in

determining what role your credit score has on your rates is to contact your

insurance company and ask them for information.


How Do I Find My Credit Score?

If you are concerned about the effect of your credit score on your car

insurance rates, you can easily determine your exact credit score. You can

obtain your credit score from a number of free organizations such as Equifax,

for example. Having an up-to-date and accurate breakdown of your credit

rating before contacting your insurance company will give you the power of

knowing whether or not their evaluation is a fair reflection of your credit



What Can I Do If I Have A Bad Credit Score?

If you do have a bad credit rating, repairing your credit is your best strategy

in eliminating this negative factor in your insurance company’s calculation of

your premiums; this will not reduce your rates in the short term, however. If

your credit score has a considerable effect on your rates, your only real

option in the short term is to shop around for a new policy at renewal time.

Though the fairness of insurance companies in using credit scores as criteria

for evaluating the risk of insuring a particular individual is arguable, at this

point it cannot be changed. Arming yourself with information about how

your rates are calculated—and remembering that as a consumer you have

the right to shop around—will help reduce the impact of this factor.

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