Written by Car Insurance Credit Score: Poor Credit Score Can Equal Higher Insurance Rates
Q: Do car insurance companies use my credit score to come up with my rates?
AIS Answer: The short answer, yes and no.
Each insurance company has their own parameters and guidelines for factoring an individuals car insurance premium. Some of those companies (a lot of the major insurance carriers) use your credit score as part of your risk assessment.
An insurance company has data that shows how your credit score can be indicative of your driving habits. Basically if your credit score is low, you’re more likely to get into an accident and be irresponsible driving. If your credit score is higher then the opposite is said to apply.
Whether you agree with an insurance company using your credit score or not, it’s a common practice that is unlikely to change in the near future. Again, not all insurance companies use your credit score, but many of them do and if you have a poor credit score it’s very likely that your car insurance premium could be lower because of the score.
my credit score is like a 470 – 480 and my car insurance rates haven’t raised much, if at all, since the drop from 620 nearly a year ago. In fact, I’ve even added a few vehicles.
I don’t agree with insurance companies using your credit score to profile people as “bad drivers”, but if the statistics are there then it makes sense. Doesn’t mean you have to like it.
Someone should leave some feedback on how they’ve noticed an increase or a decrease in their car insurance premium since their credit score raised or lowered.
Some states (like Michigan) are trying to stop the use of credit scoring in determining a persons premium. It would be great if the rest of the states followed.
credit scoring should not be used for car insurance
when my credit score dropped my car insurance rates went up. I don’t think that’s fair, I’ve never filed a claim with my insurance company.
I don’t get how paying your bills on time has anything to do with filing a claim or getting into more accidents. Credit scoring, Myfico all that stuff is just a way to stick people into one category and pay more for what they want.
I’m pretty sure Oregon uses credit scoring as a factor in insurance rates. I agree, with everyone that believes credit scores should affect your auto insurance.
why do insurance companies use your credit score? That doesn’t make any sense at all. Even if I had perfect credit, that doesn’t mean I wouldn’t file a claim. I know a lot of people with amazing credit scores that are bad drivers and file claims every few years.