A Tale Of Credit Scores And Insurance Premiums

Everyone is aware that factors like driving habits, age, and driving record affect the premium they pay for car insurance. That’s why many of these questions are asked when you get a car insurance quote.  Some are even aware that credit scores are checked by some companies, but very few people know exactly how their credit score can affect their car insurance costs.

Carinsurance.com released the results of a study demonstrating that drivers with a credit rating higher than 750 pay an average of $783 less per year compared to a driver of the same age and income bracket, but with a sub-700 credit score. According to those results, a 25-year-old driver with good credit can save $22,815 on auto insurance by retirement age. Amazing how $65 a month can add up, isn’t it? Not all companies use a credit check. Allstate never uses one and Progressive only does if you request an installment plan.

The practice has found quite a bit of opposition. A few states have passed laws against it and several others are considering banning it. Your only options until it is banned is to pay your premium upfront or search for an insurance company that doesn’t look at your credit history.

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