Is My Credit Affecting My Insurance Rates?

Is My Credit Affecting My Insurance Rates

Life can pack a real cruel punch sometimes. Things happen. Your health suffers. Your finances suffer. But, did you know that as a result of these events, your credit and financial stability can suddenly become a guide for car insurance companies to rate your worthiness on the road? Fair or unfair…it’s reality.

Car insurance companies are continually conducting studies to figure out formulas for setting their rates for drivers. And now, their most recent studies show that there may be a connection between the current state of your finances and the risk you pose of potential insurance loss for them.

No longer just a lender’s tool, many insurance companies and employers have turned to your credit history in recent years for reference on how you pay your bills and handle your money on a regular basis. While it should be noted that insurance companies are not actually looking directly at your credit history, they are being provided with an insurance score based on the information contained within your credit report. That’s why keeping your financial house in order is vital to getting the best rates possible on your car insurance.

Although sometimes it may be easier said than done, maintaining a clean credit history and displaying regularity in making your monthly payments on time can prove quite beneficial to you more often than not. If you have a low credit rating, then you should do everything in your power to improve it as much as you can as soon as possible. Of course, unexpected circumstances that are out of your control such as an illness, long-term unemployment, disability, and divorce can throw a good-sized wrench in your attempts to turn things around quickly. In most of those cases, you have to ride out the storm, which can unfortunately take a great deal longer than you’d like.

One of life’s inconvenient, but necessary expenses if you drive a car, insurance isn’t something you can afford to skip or ignore…ever. The consequences of driving our streets and highways without it can be extremely harsh – whether you get pulled over by law enforcement or get involved in an accident while uninsured. It’s not a risk you should be willing to take. So, if at all possible, your financial situation permitting, try to start making your bill payments on time. It may take a little while, but it will eventually raise your score and help you save some money.

Above all, don’t take your credit score lightly. It controls many aspects of your financial life…from your ability to purchase just about anything on credit, to being able to get your dream job, to getting a break on your car insurance. If you’ve never been good about paying your bills on time…start and change your approach. In essence, poor credit makes pretty much everything you buy more expensive with higher interest rates, higher payments, or even worse, having to come up with higher down payments. The next time you wonder if your financial state and low credit rating affects you…remember what you’ve just read…and, you’ll have the correct answer.

While you may not be able to change your credit rating overnight, you can check to see if you’re getting the best rates on your car insurance. Why not get a free car insurance quote today?

Do you think you’re paying higher insurance rates because of a low credit score?  Feel free to share your thoughts in the comment section below.