Your Credit Points Controls Your Vehicle Insurance Rate!
posted in Car Insurance Savings |Your credit score affects your car insurance rate, even though many people don’t know that fact. Unfortunately what this means is that when you down on your luck financially expect your auto insurance premiums to go up. Many people think this is equal to kicking a person when they are down. Ask any Floridian that has had trouble paying there bills how much their car insurance premiums have goon up.
The insurance industry states that your credit score is one of the top factors that are used when determining your premium factors and their reasoning is that many people having financial troubles are more apt to let policies lapse, which could cause a questionable accident during a grace period. The other factor they consider is that those having financial troubles might concoct insurance claims to get a little extra money. Of course, their statistics also show that the homeowners having trouble making mortgage payments might be more apt to commit arson.
These are common risk factors that affect anybody that is running late on their monthly insurance payments. Because those that are having financial problems are more apt to choose monthly premium payment plans, they often are constantly running late, which causes them to go into the questionable grace period. They are higher maintenance for the insurance companies when policies are constantly lapsing and being renewed, which throws them into the same class as those that have driven with no insurance.
It is easy to see how this could be a factor that insurance companies would want to consider in setting premiums, however, many people have no idea that a premium increase is coming, which causes them to start the process all over, looking for a lower premium and getting bad ratings because of that factor. For most drivers and homeowners that have had no claims, this process is exasperating, and most insurance companies don’t consider how timely you are in your payments with them.
The fact remains that most don’t realize that credit scores are figured in before tickets and accidents, which certainly doesn’t seem fair to those that are having a few financial problems, but have never had a ticket or accident on their record. In fact, their premium might be more than somebody that has had numerous incidents.
Due to the fact that mortgage holder and lien holders require you to have car insurance this problem becomes an issue that is hard to avoid. Driving without insurance will get you a ticket and your license suspended and all kinds of legal trouble should you be involved in an accident.
You never know when the insurance company will pull your credit report and re-figure your insurance premium, but you can rest assured they normally do it once a year. Even if you start to pay your bills on time it takes at least a year or more for this fact to start showing up on your car insurance rates and premium. Unfortunately there is not much you can do if you have been having credit problems, just be aware that your auto insurance premiums are going to rise.