Auto Insurance Rates Can Hinge on Credit Scores
Some consumers, especially those struggling to make ends meet in the current recession, may be dismayed to learn that their credit score can affect how much they pay for auto insurance.
According to Arizona's ABC15.com news website, the practice is fairly common throughout the auto insurance industry and drivers tend to be graded on a "tier system" that uses their credit score to determine how much they will pay.
"Some companies, not ours, believe the lower your credit score, the more likely it is you're going to have a claim and the more claims you'll file and the more severe the claims are," longtime insurance professional Richard Usher told the website.
Usher went on to tell the website that consumers should feel free to ask insurance companies if they will be subject to a credit check, while the website added that in Arizona, state law requires such checks to be disclosed. Overall, the report noted that payment history, unpaid debts and the number of new credit accounts can all impact how much one pays for auto insurance.
With these things in mind, consumers can protect their financial interests and safeguard against high auto insurance rates by doing their best to make all monthly payments on time, keeping moderate balances on their credit accounts and keeping older accounts open, since these all help boost one's credit score.