Are there car insurance companies that do not consider credit scores when calculating car insurance rates and issuing car insurance policies? Car insurance companies are all about risk.
They assume the risk that you may be responsible for a car accident while driving or incur some other type of loss involving your vehicle, in exchange for a premium that you pay monthly or yearly.
Rates are set according to statistics that help determine what type of risk a driver presents. A variety of factors is considered when setting insurance rates. These factors include age, gender, experience, claim history, driving record, where you live, the type of car you drive, and more.
Your credit history is one of the newest variables that insurers now consider when setting car insurance rates. How you have handled your credit in the past is a significant factor in how much you will pay for auto insurance.
To see just how cheap of a car insurance rate you can find, compare rates from many top companies using our FREE car insurance comparison tool today!
Understanding Why Credit Affects Insurance Rates
Credit scores are used by most companies to set rates. Credit scores have a strong correlation to a person’s likelihood to make insurance claims.
In fact, people with poor credit scores are much more likely than those with good credit scores to make claims.
Since statistical evidence of this fact came to light, more insurance companies have considered credit scores as one of the factors when determining how much a client will pay for car insurance coverage. Some industry experts state that more than 90 percent of companies now use credit scores in determining rates.
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Finding a Company That Does Not Consider Credit Scores
Since the percentage of companies using credit scores in rate setting is so high, you may find it difficult to locate a company that does not consider it. Finding one that serves your area may be impossible in some cases.
The best way to discover which auto insurance companies in your area offer no credit checks is to compare quotes and rate details from many of them.
By comparing, you will find insurers that completely ignore credit ratings when it comes to insurance quotes or companies that only use them for setting up a payment plan for your premiums.
If one insurer is significantly lower than other companies for the same coverage or better, you can feel confident that this company does not factor in the credit history.
Another way to locate companies that do not factor in credit scores is to contact your state department of insurance. They should be able to tell you which companies do not use such criteria, which will be especially important if you have bad credit and want the best price possible on your auto insurance.
Making the Best of Credit Score Usage by Insurers
You need to know what your credit scores are and what is on your credit report. The best way to know is by ordering a free annual copy of your credit report. By visiting the Federal Trade Commission website, you can find out exactly how to get your report by mail, phone, or online.
Be sure to thoroughly review your report, looking for inaccuracies and errors. If you find any errors, you will need to dispute them so they can be corrected or removed. In this way, you can improve your credit score as much as possible so that you can get the best car insurance rates.
You may also find that you have a poor credit score due to identity theft. If this case, you must report it and take the appropriate steps to repair your credit. You can find more information on the United States Department of Justice website.
In the case of bad credit for which you are genuinely responsible, learn all you can about how to improve your score so that by taking the right action, your insurance premiums will be less impacted by it in the future.
When you have ensured that your credit score is as good as it can be, you are ready to start shopping around. Be sure to check out a variety of different insurers and compare prices to make sure you get the best deal possible on your car insurance needs.
Get started with a car insurance quote comparison now!