Can Your Credit Score Lower Your Car Insurance?
July 4th, 2009, Written By: Kerri Randall
You’re probably looking for as many ways to save money as possible right now, and car insurance costs are one place where most people start. You can use a lot of factors to your advantage, such as a good driving record, but can your credit score be used to lower what you pay for car insurance?
You already know that your credit score will determine whether or not lenders will approve you for loans, as well as what interest rate you’ll have to pay. But that score is also being used in other ways today–potential employers, your landlord, and yes, your insurance agent, may all check your credit history today. Just as you’ll pay lower interest rates on loans if you have a high score, you’ll pay less on your car insurance, too.
The two ideas may seem unrelated, but to your insurance agent, a better credit score indicates that you are a good driver. Of course, if your score is low, it may seem unfair to tie those things together, especially if you know you’re a good driver. Your defense against that is to maintain a clean driving record. In many cases, that can be enough for your agent to lower your payments, but if you can maintain a higher credit score, too, that simply gives you more opportunity to pay even less.
What would the reasoning be for increasing your rates due to a low credit score? Employers may choose not to hire you due to a low score because your history of poor financial management skills could mean you are more liable to steal or lie or even search for a different job right away because you wouldn’t be able to pay off your debt with the salary they can afford to give you. Your insurance agent may follow similar logic. If you have been struggling with money, you might be liable to purposely cause a car accident in order to collect the insurance payout.
Your driving record, where you live, and the length of your drive to work can all have an effect on what you pay for your car insurance. If you know your credit score is low, do your best to improve it. Once it’s high, you might want to make sure that your agent DOES consider it when determining your rates so that your credit score can be used for your advantage.
Categories: Credit Score Information
