Does My Credit Affect An Affordable Car Insurance Quote?

By Cathy Wilson Posted in Car Insurance News

There are various obvious factors that go into determining someone’s car insurance quote, but one factor that many don’t consider is how your credit could affect an affordable car insurance quote. Over 90% of car insurance providers do, in fact, use a driver’s financial credit history to determine their quote. There are various reasons why an auto insurer uses a person’s credit history to determine auto insurance quotes.

More Likely To Be Involved In An Accident

The main why credit is used to affect affordable car insurance quotes is that people with bad credit scores are more likely to make insurance claims than a person with good credit. Based off of research which proves this, the auto insurers are able to classify people with poor credit as being far more expensive to insure over time than an individual with good credit. In an attempt to not lose money on any specific customer, the insurer is then forced to increase the rates they charge to people with bad credit.

Less Likely To Make Payments

Another reason why credit is used to affect affordable car insurance quotes is that people with bad credit scores are far more likely to miss payments. Like all other creditors, an auto insurance provider has to spend a good amount of resources sending out notices of late payments or calling delinquent clients. Since people with bad credit on average will miss more payments than a person with good credit, they are considered to be a more expensive customer by the insurer. Unfortunately for the insured individual, the only way to recoup the expected collections loss is by charging more for people with bad credit.

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  4. How Does My Credit History Affect My Car Insurance Coverage Rate?
  5. Will My Credit Score Be Used Against Me In A Car Insurance Quote?

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