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March 5, 2021

How Credit Affects Auto Insurance Rates

family riding in carInsurance premiums are calculated from a number of factors, including where you live, your age, your claims history and your occupation. Your credit score also plays a significant role in establishing the cost of your premium. 


Learn more about why your credit score is used to determine your personal risk. And explore implement credit-bolstering measures to secure a cost-effective premium.


How Your Credit Score Affects Your Premium

Research shows that if you are responsible with your finances, you will most likely be responsible when driving your vehicle, taking care of your home and managing your health. 


Along with loss reports and other personal information from your insurance application, your credit score helps to determine the likelihood that you may experience a loss. Statistics show a higher credit score indicates a lower risk, translating to a decreased rate. However, a lower credit score indicates a higher risk and increased rates.


How to Bolster Your Credit Score 

These credit-improving steps can help you obtain the best possible insurance rates:


  • Pay all bills on time.  

  • Keep credit card balances low. 

  • Apply only for needed credit cards. 

  • Look for loans, mortgages and credit cards with the lowest interest rate within a specific time period. 

  • Do not close unused credit cards as a means of raising your credit score. Conversely, do not open new accounts to increase your available credit. 


How to Review Your Credit Score 

Get your credit score from a trusted organization. The most trusted organizations to contact for this information include Experian (1-888-397-3742), Equifax (1-800-685-1111) or TransUnion (1-800-888-4213).  


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