If you are like many people, you are probably always looking for ways to reduce your auto insurance premium. Although you might already know that car insurance companies look at your driving record and past claims when determining your rate, you may not realize that they also use a credit-based auto insurance score as a part of the equation. Learning more about this score can show you how it affects you and what you can do to improve it.
What are Car Insurance Scores?
Auto insurance scores are actually determined using information from your credit report. Although you could be wondering what your credit history has to do with your driving ability, multiple studies have shown that there is a correlation between low credit scores and high payouts from insurance companies.
How Your Car Insurance Score Affects You
You might not think that your auto insurance score has a major impact on your insurance rates, but you might be surprised. This score can cause your rates to go up by a thousand dollars or more every six months, and it can have an even greater impact if you have a less-than-perfect driving record. Therefore, it is important to pay attention to your auto insurance score if you want to save as much as possible on your auto insurance rates.
How is Your Auto Insurance Score Determined?
Although insurance companies do use other factors when determining rates, the auto insurance score is calculated solely with information from your credit report. This means that the score is determined based on the number of accounts that you have, the average age of your accounts, the number of accounts that are in collections and more.
How to Boost Your Auto Insurance Score
Boosting your credit history can help you in many areas of life. Not only can it allow you to improve your auto insurance score, but it can also help you snag lower interest rates on vehicles, personal loans, houses and more.
First of all, you should work to pay off any debts that you can. You can also strike deals with your creditors to have negative entries removed in exchange for paying your debts in part or in full. It can take months or even years to boost your score in this manner, but doing so will help both your auto insurance score and your overall credit history.
Time can also help you improve your auto insurance score. Over time, negative reports will fall off of your credit report on their own, and you won’t have to worry about them affecting your auto insurance score or your credit score any longer. The same is also true for credit inquiries that appear on your report after applying for credit.
Although you might not be able to make a change in your auto insurance score overnight, diligently working toward a better credit score will help. In the meantime, it is important to maintain a safe driving record and to shop around on sites like Insurance Hero for the lowest possible auto insurance quotes to get the best deals.