Why Your Credit Rating Affects Your Auto Insurance

Why Your Credit Rating Affects Your Auto Insurance
By Sadie A Peterson

Back in the good old days, your auto insurance premiums were based strictly on things like -

• your age
• your driving record
• the make and model of your car
• where you lived
• whether you owned your home
• how many miles you commuted
• how many miles you drove each year
• how many claims you had filed

But in today's world, insurance companies look at other factors in determining who they want to provide coverage for and what premiums they will charge. Your credit information is now a vital aspect in their decision-making process.

Why?

To put it bluntly, a bad credit risk is a bad credit risk ... regardless! If you are delinquent in paying your other bills, you will most likely be delinquent in paying your auto insurance premiums.

But statistics also show that people who are delinquent in paying their bills are more likely to file a claim. And insurance companies don't like it when you file claims!

Even if you've never been late on a payment but you have no credit cards (and thus no credit history,) this can also be construed as negative. In other words, your credit history determines how responsible the rest of the world sees you. No credit history = not responsible.

From the insurance company's point of view, the healthier your credit history, the less likely you are to file a claim against your auto insurance policy, and the more likely you are to pay your insurance premium payments.

If your credit history (along with the other factors the insurance companies consider in determining your insurability) suggests that you are likely to be a responsible driver, your premium is likely to be lower. But if your credit history is blemished or you don't have enough credit history, you will probably end up paying higher premiums for coverage. Or you may even be denied coverage altogether.

Is it fair? No. Is it legal? Apparently. Does it even make sense? Not really. Is there anything you can do about it? Clean up your credit ... and then shop for coverage elsewhere.

Sometimes, once you've been dinged by an insurance company, they are not very willing to let you start afresh so you may need to go with another insurer. Just accept this as the way things are and do what you can to make your situation better. Use the internet to quickly get a free online car insurance quote from several companies at once.

For more advice and helpful information on how to get a free online car insurance quote or for more information on insurance quotes for auto insurance, home insurance, health insurance, life insurance and more, please visit 1st-Insurance-Quotes-Tips.com which can be found at http://www.1st-insurance-quotes-tips.com

Article Source: http://EzineArticles.com/?expert=SadieAPeterson
http://EzineArticles.com/?Why-Your-Credit-Rating-Affects-Your-Auto-Insurance&id=340333