Your Credit Points Sways Your Vehicle Insurance Cost! November 1, 2009
Posted by janey in : household budgeting , trackbackYour credit score affects your auto 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. Of course they also figure that a certain number in this category will fabricate an insurance claim just to get a little 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. It is just a fact that those having financial trouble will opt in for the monthly payment option and if they are always late will fall into that grace period. If your constantly in that grace period or they have to continually call you then your higher maintenance and they put you in the same category as those who chose to drive without insurance.
It is easy to see how this could be a factor that insurance companies would want to consider in setting premiums, however, most people are completely unaware that a price rate increase is coming, they react by starting the process all over, looking for a lower premium and getting bad ratings because of that factor. This process is frustrating to say the least for those who have had no claims, and worst of all the insurance companies don’t even take into account how punctual you are with your payments to them.
Many people don’t realize that credit scores are considered ahead of tickets and accidents, which causes those with financial problems to pull their hair out. In fact, their premium might be more than somebody that has had numerous incidents.
Because auto insurance coverage is required by mortgage and lien holders and is required by law in most states in order to register your vehicle, 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.
Insurance companies have people assigned to do nothing more than pull your credit score and reevaluate your insurance premiums and you can bet that they will do it at least once a year. If you have started paying bills on time, it can take as much as a year to see the change in your credit score and a lowering of your auto insurance 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.
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