Car Insurance And Your Credit Score – How It Affects Your Rates
Reader’s Question:
Why do car insurance applications include questions about for credit history or if you have claimed bankruptcy in the past?
Sarah
Birmingham, AL
There is much debate over the use of credit scoring to determine car insurance rates. There have been similar issues in the past with regards of using age, marital status, sex, etc.
Car insurance rates are not solely calculated based on credit score. There are other factors such as the type of car, where you live, driving record, etc. The purpose of getting all of this information is to correlate the insurance rate as closely as possible with the actual cost of potential claims. That is essential to understand.
Using insurance carrier statistics it is known that motorist with bad credit record historically file more accident claims than motorist with good credit. Credit score may also determine whether an applicant is likely to pay premiums in a timely fashion.
Loading ...