Auto Insurance Quotes: The Credit Connection

One thing you may not realize when you establish a credit history is that your credit rating will influence far more than your future borrowing ability. Many employers now request permission to review their job applicants' credit histories, and your credit rating can even play a part in your auto insurance quotes.

Your insurance company will regard your credit score as a reflection of your attitude toward your financial obligations, and as a way to judge your behavior. A poor credit score will be a red flag and your insurance company will consider you a high risk driver. If, on the other hand, your credit record shows that you pay all your bills on time and keep no or minimal balances on your credit cards, you will be seen as a low risk driver.

Your insurance company will also use your credit record to help them determine if you might submit more claims than normal. You may think this sounds somewhat extreme, but it has been standard operating procedure in the auto insurance business for decades.

You Really Need A Credit History If you are young or one of those rare individuals who has managed to get through life without establishing a credit history, your insurance company will rely on your driving history and age in determining your auto insurance quotes. You will be unlikely to receive the same low rates as drivers with comparable driving records who have good credit histories. So if the amount you spend on auto insurance is important to you, you should establish a good credit history.

Your credit reporting agencies consider it perfectly acceptable for auto insurance companies to access your credit history to help them arrive at your auto insurance quotes. But if your quotes seem unreasonably high, you should request your own copies of your credit reports so that you can check them for errors which might have lowered your credit score. If you discover any errors, document them and send the information to the reporting agencies so that you can have them cleared. Then ask for new auto insurance quotes.

When examining your credit history, your insurance company will consider the amount of your debts, and your reliability in paying them on time. They will pay attention to the amount of remaining credit you have available and the length of your credit history, and if they are satisfied with what they learn, you are likely to be given low auto insurance quotes. But no one except your auto insurance carrier knows exactly how large a part your credit score plays in their computations.

Your Insurance Score You should not confuse your insurance score and your credit score. Your insurance score is a factor in determining whether or not you will have a higher than average risk for insurance losses. While this score is purely conjectural, it will still be used by your insurance carrier to set your auto insurance quotes.

If you think your insurance premiums are on the high side, consult your agent and find out if the quote was based on your driving record and age, or your credit report. You can't effectively shop for auto insurance quotes until you know where the problem lies and do what you can to repair it.