How Credit Scores Impact Your Rate

Everyone knows what a credit score is, but have you ever heard of an "insurance score"? Insurance companies use insurance scores to calculate a consumer's risk level, and the lower your credit score, the more you'll pay for car insurance.

Bad Credit = Higher Insurance Rate

Studies have shown a correlation between a person's credit score and their likelihood of their filing a claim. A person with a low insurance score is more likely to file a car insurance claim, so they will pay an above average car insurance rates. Likewise, a person with a high insurance score is less likely to file a car insurance claim and will be rewarded with below-average rates.

In fact, according to the Insurance Information Institute, the average cost of a claim for a person with below-average credit is $918-- 53% higher than the average claim. Likewise, the cost of an average claim from a person with above average credit score is $558-- 23% below the average claim.

Ethical or Not?

Many people don’t like the fact that their credit scores are being used as an underwriting factor for their car insurance. But what most people don’t realize is that if their credit score is high, it could be saving them money on their car insurance premium. It all comes down to keeping your credit score in order.

Whether your credit score is good or bad, if you think you’re paying too much for car insurance, compare car insurance quotes at InsWeb.com to find the policy you need at the best possible price.