Yes. Your credit history can make a difference on what you end up paying for auto insurance.
In all states except California and Georgia, an individual’s credit rating is a key factor that affects auto insurance rates. According to a recent study of the insurance industry, more than 90% of auto insurance companies use your credit information to determine how likely you are to file an insurance claim. The more likely you are to file a claim, the higher the risk you are to the insurance company, which could translate into a higher premium.
Basically, the insurance companies take your credit information and run it through a formula to create an “insurance risk score.” It is similar to the process that a lender would use to approve a loan or credit card. It’s just a slightly different formula.
How important is your credit history when it comes to your auto insurance premiums? More than half of the insurance companies surveyed used credit history information to decide how much to charge in premiums.
So, before buying insurance, make sure to get copies of your credit report and correct any inaccurate derogatory points.
The good news is that an excellent credit history could help lower your auto insurance premiums. If you don’t have great credit, or where credit history isn’t used, you may still be able to lower your auto insurance premium simply by comparison-shopping.
An easy way to shop and compare is to take advantage of the insurance shopping service offered by Answer Financial®.
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Business Valuators / CPAs