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| Credit & Car Insurance Rate |  You should know that lenders use information in your credit report to decide if they'll give you credit. But in some states, insurance companies also take into account your credit history. Good or bad, your credit history may influence your ability to buy homeowners or auto insurance coverage and help to decide what premium you'll pay.
For instance, look through these scenarios:
• Two years ago, you were unemployed for six months. You fell behind on several credit card payments before you could find a new job. Now your auto insurance rates are increasing, even though you've never filed a claim against your policy.
• You've always paid your bills on time, and you've always paid cash instead of applying for credit. Why it is a problem? Similar to when you apply for a mortgage or credit card, your lack of credit history means you’re an unknown quantity – there is no history of monthly credit card payments.
Many people think that only their driving record is essential, but that’s simply not the case. A lot of auto insurance companies think over credit as a very essential rating variable.
Credit history
Insure providers have always used various criteria to decide who to insure and at what rates. For instance, if you're applying for auto insurance, your insure provider might take into account your age, driving record, make and model of your car, and how many insurance claims you've filed in the past. But recently, insurance companies have also started employing credit information as additional criteria to help predict which persons have more risk. Insurers think that the better your credit history, the less likely you are to file a claim against your auto insurance policy and the more likely you are to pay your insurance premium payments.
If your credit history (along with other criteria considered) suggests that you are likely to be a reliable driver, you may be provided a lower premium. But if your credit history is tarnished – or if you have little or no credit history – you may pay higher premiums for the coverage you're provided. You may even be denied coverage altogether.
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Credit & Car Insurance Rate