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Your Credit Score May Affect Your Premium
Before you buy auto insurance, answer this question: How good is your credit rating?
What does a credit rating have to do with auto insurance you ask? Plenty. You see, a growing number of insurers are using credit data to help determine your insurance rate.
Fact: 92 of the 100 largest personal auto insurance companies use credit data to underwrite new businesses, according to a study by Conning and Company, an insurance research and asset management firm in Hartford, Connecticut.
The fact is drivers with the worst credit rating file 40 percent more claims than drivers with strong credit ratings, says the Insurance Information Institute in New York. Indeed, a Casualty Actuarial Society study says people with good credit but poor driving records had better loss ratios than people with bad credit records and clean driving records. All this translates into higher insurance premiums for consumers with bad credit - as much as 20 percent to 50 percent more, according to Conning and Company.