Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of policy products including home, biography, car, and commercial and working directly with policy customers to understand their needs. She has since used that cognition in her more than ten years as a writer, largely in the insuranc …

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Written by

Leslie Kasperowicz

Farmers CSR for 4 Years

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his syndicate ’ south policy agency, FCI Agency, for 15 years ( BBB A+ ). He is licensed as an agent to write property and casualty policy, including home, car, umbrella, and dwelling fire policy. He ’ second besides been featured on sites like Reviews.com and Safeco. He reviews contented, ensuring that antique …
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Reviewed by

Daniel Walker

Licensed Auto Insurance Agent

column Guidelines : We are a release on-line resource for anyone interest in learning more about car indemnity. Our goal is to be an objective, third-party resource for everything car indemnity related. We update our site regularly, and all message is reviewed by car policy experts .

Things to Remember…

  • While credit history and scores are most commonly used to obtain additional lines of credit and sometimes employment, they are also used by the majority of auto insurance companies to help determine the rate that you pay for car insurance
  • However, in some states, it is illegal to use credit to determine an insurance premium
  • Mediocre or poor credit scores and history can have a negative effect on the auto insurance premium you pay
  • Working to improve your credit score will help you to pay reduced auto insurance premiums. You can also use an online auto insurance comparison tool to find the best rates for your situation
  • There are several other factors used in determining your car insurance premiums other than credit scores and history, such as your driving record and history

While most consumers expect to have their credit checked when applying for a car loanword, a mortgage, or even as a pre-employment screen, many are unaware that their credit can affect what they pay for car insurance .
This can seem alarming and invasive, but car insurance companies rely on credit scores to assess how risky it will be to insure a driver.
however, even if you have a inadequate citation history, you can placid decrease your car indemnity premiums by using an on-line car policy comparison calculator. Compare car policy rates now by using our free tool above !

Is it legal to use credit scores to determine auto insurance rates?

While it may seem unfair or illegal for a car indemnity company to use your credit history and score when determining the price you for car policy, it makes sense for car policy companies to do so .
FICO, a major company that is hired to generate credit-based policy scores reports that about 95 percentage of car insurance companies and 85 percentage of homeowners insurance companies will use credit-based policy scores in decree to determine risk classifications .

These companies will examine several pieces of your recognition, including payment history, how long you have had credit, accounts in collections, outstanding debt and any history of bankruptcy to come up with your premium rate .

This information is used to determine your credit-based insurance score. To find out if credit ratings can be used to help determine the price of your car policy policy in your own state of matter .

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How is my credit score used to determine the price of my auto insurance policy?

There are a few unlike citation report companies that your policy company can use to help create a policy agio that factors in your credit history .
These companies, such as FICO, will by and large look at five general groupings to formulate how much of a risk you will be for the car insurance ship’s company.

  • Payment History– This accounts for approximately 40 percent of your credit-based insurance score and looks at how well you have paid your outstanding debts during your credit history
  • Owed debt  –This area simply gives weight to how much debt you currently have and can account for up to 40 percent of your score
  • Length of Credit History  – How long you have had a line of credit can count up to 15 percent of your total credit-based insurance score
  • New Credit Inquiries  – How often you’ve inquired about lines of credit can impact your overall credit score up to 10 percent
  • credit Mix  –Finally, the different types of credit you have, such as car loans, credit cards, student loans, and mortgages will account for about 5 percent of your credit-based insurance score

Information that Can’t be Used to Determine Your Auto Insurance Score

While a lot of factors go into determining the premium you will pay on your car policy policy, there are many other personal pieces of data that policy companies are not allowed to use when deciding on the rates you will pay from a credit-based insurance score .
These details include :

  • Age
  • Income
  • National Origin
  • Race
  • Color
  • Gender
  • Marital Status
  • Employment, occupation, and income history
  • Location of Residence
  • Interest Rates Paid
  • Rental Agreements
  • Child or Family Support Obligations
  • Specific types of inquiries into your credit reports, such as account review inquiries, employment inquiries, and promotional inquiries.

Can I improve my credit-based auto insurance score?

barely like you can take steps to improve your accredit report and score over time, you can besides take exchangeable steps to improve your credit-based policy score. When your normal credit score and history improves, indeed will your credit score, which will lead to better rates over time .
You can improve your score by keeping your balances abject on existing accredit cards, not opening new accounts, making payments on time, and paying off any outstanding debts you have .
If you are behind, do your best to catch up on those accounts and stay current.
You should besides take a effective count through your own credit report card at least once per class. You should look for any inaccuracies in these reports, including accounts that were never yours .
Be sure to report any errors immediately to the applicable credit report agency in decree to get them corrected and removed from your report .
Checking your own credit reports and making surely they are accurate can help you get the best insurance premiums .

Free Auto Insurance Comparison

enter your ZIP code below to view companies that have brassy car indemnity rates .

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Other Factors that Help Determine Your Auto Insurance Premiums

While credit scores account for a goodly parcel of determining the rate you pay for car policy premiums, there are several other factors used by car indemnity companies to come up with the rates that you pay .
Your driving history, including tickets, accidents, and claims are considered in their calculations. Factors that you can not control, such as how old you are and your sex besides can affect the price you pay for indemnity on your vehicle .

The length of your drive phonograph record and if you have taken any driver ’ mho education or defensive drive courses will besides be considered when determining your car policy premium .

It can be disconcerting and feel like an unfair invasion of privacy to learn that car indemnity companies can and do check your accredit scores and history to help determine the rates that you pay.

however, it is important to know that there are several other factors that help determine your rate and even factors that they can not legally take into consideration when deciding on the price of your car policy premiums .
enter your travel rapidly code in our complimentary tool below to start comparing car policy rates nowadays !

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