Credit and Insurance
Did you know how much you pay for auto insurance is based on your credit?
Most people are shocked when they hear that auto insurers use credit scores in the course of deciding whether to cover drivers and what premium they should be charged. If you are like most people, it could be difficult to see the connection.
Why should you have to pay a higher rate for your car insurance because you had unpaid bills or some other financial problems. Some customers who had never had an accident or violation were faced with sharply raised premiums when their renewal notices arrived.
In fact, auto insurers are passionate in their belief that credit scores are one of the best predictors of future claims.
According to the American Insurance Association, here are some of the kinds of data from credit reports that are of most interest to insurers:
Payment history (any late payments?)
Amount of outstanding debt
New applications for credit
Know what is in your credit report. It is a good idea to run your credit regularly and monitor for any inaccuracies.