Auto Insurance Rates and Your Credit Score

| Auto insurance, Insurance education.

Auto Insurance Rates and Your Credit Score

Did you know there is a correlation between auto insurance rates and your credit score? Many consumers are not aware that most auto insurance providers consider credit score when pricing your auto insurance. This practice is controversial and some states, specifically California, Hawaii and Massachusetts, have banned credit score use. However, in Nevada your credit score is likely to have an impact on your auto insurance rates.

Insurance companies use very complicated rating models to determine the price you pay for auto insurance. Many of the factors in that rating model make perfect sense: history of tickets, accidents, type of vehicle, where you live and work, driver age and gender, etc. Credit score, as a rating factor, is a slightly harder to correlate to auto insurance pricing. However, there is strong statistical evidence that shows individuals with a higher credit score tend to have fewer auto accidents versus those with lower credit scores.

Statistical analysis looks at things in the macro, which means there will always be individual exceptions to the rule. Certainly there are thousands of drivers with a lower-than-average credit score, who have never had an accident or other insurance claims. Fortunately, credit is just one factor, out of many, used to determine auto insurance rates.  And, how much credit affects your rates varies greatly from one insurance company to another. At Safeguard Insurance, we work with many providers of personal auto insurance. A few of those providers give large discounts for a high credit score. Other providers adjuster rates only slightly for a high credit score. This is exactly why reviewing your auto insurance rates periodically is a great idea. Rating models and credit scores change and we may have a better price for your auto insurance.

So, if your credit score has suffered a blow during the last economic recession, do not assume that means you are doomed to pay higher auto insurance rates. Call our friendly agents at Safeguard Insurance and let us provide you with a no-obligation quote for personal auto insurance. Chances are we can save you money, give you better coverage, or both.

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