Guide To Your Credit Rating And Auto Insurance

This full guide to your credit rating and auto insurance will show how one impacts the other. Which insurance companies use your credit rating and why? What information is actually in the report? What part of the information does an insurance company look at? These questions, and others, are answered for you below. As with all products, shopping for rates is one of the best steps to save money. If you request a quote for auto insurance here, we'll connect you with leading auto insurance carriers who can do just that!

Your credit rating and auto insurance

A credit score is a number given to you that represents how good or bad your credit history is. The number is determined by a few different factors. Basically, it determines whether you pay your debts on time, including your monthly utility bills, how much debt you've had in the past, and whether or not you were delinquent in your repayment habits. The better score you have the less of a risk you will be to an insurance company.

Almost every insurance company will use your credit score as one of the factors in deciding whether or not to insure you, as well as how much to charge you for your coverage. Why? Because the auto insurance companies figure that if you're the type of person who pays your debts, then the likelihood of you making timely premium payments is good. The more financially responsible you are, the less of a risk they're taking by entering into an agreement with you.

How long is your debt history kept?

A full guide to your credit rating and auto insurance wouldn't be complete without letting you know how long your credit history will last. It really depends on the type of debt you've incurred. It's a bit intricately calculated, but usually bad debt will remain on your credit history anywhere from 7-10 years.

Some stats about credit history and auto insurance

• More than 90% of all insurance providers use your credit history when calculating the cost of your annual premiums.
• The average consumer today has approximately 13 credit obligations that are on file with the credit bureau at all times.
• The average consumer's oldest debt obligations go back 14 years.