Good Credit Score May Lower Your Auto Insurance Premium
Your car insurance payment may be on a rise and it has nothing to do with your driving history. New controversial way auto insurance companies determine your risk on the road. A speeding ticket, a fender bender, a teenage driver, accident, maybe a DUI, all of those things can drive up your auto insurance premium but another factor that determines how much you have to pay and most will never even consider it.
No auto insurance policies are the same but most drivers figure they know what important to their insurance policy. While your road record is a factor but so is your credit score, nearly every auto insurance company are starting to use your credit score to set your premium. Some may put more weight on your credit history than your driving history.
State Senator Jeff Plale had cosponsor a bill that banned the practice because he says on the surface it doesn’t seem to make sense.
However, the auto insurance industry says there is a link, in fact they say state and federal studies have constantly found a strong correlation between credit scores and the risk of loss. There are several studies done that demonstrate a high correlation between your credit score and your likelihood to file a claim and it correlates with both numbers of claims and the dollar amount.
That may be the key risk the auto insurance company are assessing and not the risk of getting into an accident, it is the risk of filing a claim. That the insurance companies claim credit score can help in the future.
Credit scoring means low rates for more than 60% of the consumers but the practice is not good news for everyone. The people are most affected by are people who are not responsibly use their credit or who may have inaccuracy record on their credit report.
The bill to ban this practice is pending on the state, it is not only using credit score for your car insurance but also your home insurance as well. The insurance companies are allowed to use credit score to factor in setting rates.