Car Insurance And Your Credit History - Why Does It Matter?
If you're shopping for car insurance, you may not realize some of the factors that affect how much you pay. One of the most surprising factors is credit history. Why do car insurance companies look at your credit history?
Car insurance companies rate insurance coverage based on the risk that you'll file a claim. For example, younger, less experienced drivers are considered a greater risk and thus pay more for insurance. Well insurance companies believe that there's a correlation between a person's credit history and their chance of filing a claim. Someone with a good credit history means -- to the insurance company -- that they are less likely to file a claim than someone with a poor credit history.
What that means is if you have credit problems, you could end up paying a higher rate. Of course, many other factors come into play as far as your overall costs. These include your age, driving record, the type of vehicle you drive, where you live, the coverages you want, available discounts and much more. Also, car insurance rates vary from company to company.
So what can you do? First of all, if you do have bad credit start working on repairing it. It may take a year or two but in the long run a good credit history can help you in a lot of ways.
In the meantime, make sure you shop around for auto insurance. Because rates vary, you should get several -- at least three -- quotes for comparison. Go online to a comparison web site where you can enter information in once and get several quotes back. Or call agents in your town. Ask them if credit rating is affecting your quote. When you get quotes, just make sure to provide the same information about coverages and deductibles, driving distance etc., so you can get the most accurate comparison.
You can get free comparison car insurance quotes, and more information about saving on car insurance at LowerYourInsurance.com. The site includes a handy sheet you can use to help compare quotes. Justin Scott is an insurance freelance writer.
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