Your Credit Score Influences Your Car Insurance Rate
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Your credit score affects your auto insurance rate, even though many people don’t know that fact. Unfortunately what this means is that when you down on your luck financially expect your auto insurance premiums to go up. To many this is akin to kicking you when your down. Just ask Florida residents that have had difficulty keeping up with their normal bills only to find their insurance premiums rise dramatically.
According to the insurance industry spokesperson, your credit score is one of the most important indicators used to determine your auto insurance rate and their reasoning is that many people having financial troubles are more apt to let policies lapse, which could cause a questionable accident during a grace period. Of course they also figure that a certain number in this category will fabricate an insurance claim just to get a little money. Of course, their statistics also show that the homeowners having trouble making mortgage payments might be more apt to commit arson.
These risk factors affect anybody that runs late on payments or have a hard time making the payments on their insurance through monthly payment plans. Because those that are having financial problems are more apt to choose monthly premium payment plans, they often are constantly running late, which causes them to go into the questionable grace period. They are higher maintenance for the insurance companies when policies are constantly lapsing and being renewed, which throws them into the same class as those that have driven with no insurance.
I guess it’s understandable that the insurance companies would consider this in determining your rate, however, many people have no idea that a premium increase is coming, which causes them to start the process all over, looking for a lower premium and getting bad ratings because of that factor. This process is frustrating to say the least for those who have had no claims, and worst of all the insurance companies don’t even take into account how punctual you are with your payments to them.
Many people don’t realize that credit scores are considered ahead of tickets and accidents, which causes those with financial problems to pull their hair out. Truth be told a lot of times there rates are higher than those with numerous accidents.
Because auto insurance coverage is required by mortgage and lien holders and is required by law in most states in order to register your vehicle, this problem becomes an issue that is hard to avoid. You will get tickets without insurance and you don’t want to be involved in an accident without it.
Insurance companies have people assigned to do nothing more than pull your credit score and reevaluate your insurance premiums and you can bet that they will do it at least once a year. If you have started paying bills on time, it can take as much as a year to see the change in your credit score and a lowering of your auto insurance premium. Your credit score affects your auto insurance rate and if you have been experiencing credit problems, the next problem will be higher auto insurance premiums, unfortunately.
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