What does your credit rating have to do with the rates you pay on auto insurance? It may not make much sense to you, but aside from your driving record, the state of your personal finances can play a major part in determining whether or not you can get the best auto insurance rates when it’s time to buy car insurance. Drivers with good credit ratings are considered a good risk. Drivers with bad credit get penalized, and can pay 20% or even 50% more on auto insurance than someone with spotless credit.
Paying all your bills on time may not seem to have much to do with how good a driver you are, but there are statistics to show that there is some correlation between the two. According to a study conducted by the Insurance Information Institute, drivers at the low end of the credit spectrum tend to file more claims than those at the higher end about 40% more. Other studies seem to confirm that people with bad credit file more claims than people with good credit.
So before you shop around for auto insurance, it pays to find out your credit score and make sure you do the same things you would do before applying for a loan or credit card. And just because getting a credit report will pay off, it doesn’t mean you should have to pay for one. You can get free credit reports from a number of online sites. Keep making your payments on time, don’t carry high balances on your credit cards, and get rid of high interest credit cards if possible. If your credit is not good, you might also look at other ways to lower your auto insurance rates, such as opting for a higher deductible, or consolidating all your insurance policies with one company for a discounted rate. And as always, shop around for the best rates on auto insurance that are available to you. Some companies may specialize in bad credit auto insurance, so you can find the lowest auto insurance rates available to you.
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