Bad Credit Auto Insurance
May 3, 2008
Many people do not realize that major insurance companies use certain credit information in order to help them to decide on what an individual’s insurance rate should be. What does this mean? As far as most insurance companies are concerned, bad credit equals a bad driver. This may not sound fair, but studies have determined that there really is a correlation between people who do not have the best credit record in the world and those people who tend to file automobile insurance claims.
Information from the Insurance Information Institute reveals that car owners who had a low credit score filed a little over 40 percent more claims than those folks with AAA credit. This also reveals that people with poor credit are going to pay more for their insurance. However, people who have a good credit record will be offered a much lower rate. A person could have a spotless credit report and a not so spotless driving record will receive a lower insurance quote than somebody else who has poor credit and a clean driving record.
These insurance companies look at different facets of your credit information. They are not interested as much in the names of the companies where you get credit and whether or not you could apply for and receive more credit, but how well you handled the credit you already had available to you. They need only to examine your credit score to get this information, not your entire credit report. The idea is to see how trustworthy you are with credit, take note of whether you pay your bills on time or whether you have any late payments on your accounts.
What can you do if you have bed credit and need to get auto insurance? Most states require you to have at least liability insurance on your car, so this is definitely not a problem you can afford to ignore. Fortunately for you, not every insurance company will use your credit score as criteria for insurance. You can take the time to check the different auto insurance providers and see what their requirements are as well as their rates. All insurance companies have different rates, and some can be much lower than others. Another good idea is to take a look at your credit report yourself so that you can see exactly what the insurance companies are going to be looking at when you attempt to take out one of their policies.
It is not impossible to get automobile insurance if you have bad credit, but it can be a little tricky! Make sure the company has all of your information before they give you a quote, such as the year, make and model of your car, VIN number, your age, and what part of the country you live in. This information also has some bearing on the insurance rate you will receive.
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