It is perfectly possible to have an unblemished driving history with not even a speeding ticket to your name, and pay a car insurance premium at a rate of up to three times higher than someone else. You may never have filed a car insurance claim in all your driving days but you can still be considered high risk and charged far more than the average rate. Many people are still unaware that there is a direct correlation between ones all pervasive credit score and their insurance premiums.
Insurance underwriters have long since made the assessment that those with poor credit scores are deemed more irresponsible. They are considered to be less likely to attend to crucial matters such as car maintenance, and are deemed more likely to make claims on their policy, or even exaggerated claims. Having a low credit score may not necessarily mean you fit this assessment made by insurance companies but it will land you in the same category as those who are higher risks.
If you have paid bills late no consideration of extenuating circumstances are made, no matter how long you have been with your insurance company. Not only does this result in you being deemed less responsible but there is the added risk you will default on your insurance premiums. Unfortunately those who do not use credit and have no credit history will also be categorised as higher risks, emphasising just how all important a good credit score has become in so many areas of day to day life.
Sometimes the credit score is combined with other factors which categorise drivers as higher risk such as education levels and occupations. This often results in those less able to pay the highest premiums being the ones which end up doing so. Other considerations are taken into account with your premiums as well such as age, your vehicle and where you live, but the majority of insurance companies now give great weight to credit scores.
When you are looking for an insurance provider take the time first to obtain a copy of your credit report and ensure there are no errors recorded. You have the right to have these removed. If your credit score improves then contact your provider and ask to have your premium reassessed. If you have a low score and feel that you will be inevitably penalised for it with a higher auto insurance premium then seek out a company which does not consider credit scores when it rates your risk.
On the positive side those who maintain an excellent credit score are rewarded with reduced insurance premiums, even if their driving record is less than perfect. They are considered low risk as manage their finances responsibly. It really does pay to keep your credit score on the excellent side of good, and to work to improve it if doesn’t make the grade.