Will My Credit Score Be Used Against Me In A Car Insurance Quote?

By Sharon Gibson Posted in Car Insurance News

Many people have questions about their car insurance. The question that seems to be on the tip of everyone’s tongue is “Does the insurance company use my credit score to determine a quote?” Put simply, the answer is, yes, they do.

How Does Insurance Work

Insurance companies are the business world’s equivalent to a bookie. They are in the business to make money, but they only make money by taking risks on your driving habits. A poor driver, who has claims against him or her, will have to pay more because they are more likely to have future claims against them. On the same note, a good driver with no claims, is statistically likely to continue on that trend, so they get to pay less.

Why Use My Credit Score

Your credit score does what no other tool in the insurance companies’ arsenal can, it is an evaluation of your past behavior. If a driver has ruined their credit, then they are prone to making poor choices. It is therefore likely that they will make poor choices in the future, to include while driving. On that basis, the driver with poor credit will pay more for insurance. On the other hand, the driver with a good credit score is showing that they have a tendency to make well thought out choices. The same correlation applies, if they made good choices in the past, then they will likely continue that trend and continue making good choices, especially while driving a car.

The Debate Rages

Many people are angry that the insurance companies continue to use a credit score as a basis for an auto insurance quote. Supporters argue that it is a financial investment in the person, and therefore, perfectly sensible. Regardless of your stance, you should be aware that the practice is in place and will continue to be used for quite some time unless legislation is passed banning the use. Beware that the next purchase you make on credit could send your car insurance ticking skyward.

Related posts:

  1. How Does An Insurance Score Work For Car Insurance?
  2. Will My Credit Score Be Used In An Auto Or Car Insurance Quote?
  3. How Does My Credit History Affect My Car Insurance Coverage Rate?
  4. Does My Credit Affect An Affordable Car Insurance Quote?
  5. Will Getting Car Insurance Quotes Online Ruin My Credit?

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