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If you're looking for auto insurance to compare, you want to find a reliable company. And when insurance companies look at potential customers, they also want reliability. What many people don't know, is that insurance companies may be more concerned with your credit record than your driving record. In getting auto insurance to compare, if you want low rates, you need to have good credit.
When insurance companies check credit reports, they don't look at them like a bank would. They use a scoring formula to rate your credit that doesn't take your income into consideration. The credit score also doesn't include your gender, age, marital status, or where you live. It's mainly focused on signs of responsibility, such as how you've paid your bills and whether you've had any financial problems like bankruptcies or judgments.
It's estimated that over 90% of all auto insurance companies use credit records to either help set rates or decide whether to issue a policy. And the reason that they do, is because of the studies of millions of policyholders' records. The studies revealed that on average, a driver with poor credit made more claims and for larger amounts than a driver with good credit. So when you get quotes on auto insurance to compare, the better your credit is, the lower your quotes will be.
If you're wondering if your credit is affecting the quotes on the auto insurance you compare, the best way to know is to ask. The Fair Credit Reporting Act requires that the insurance companies tell you if they take an "adverse action" against you because of your credit record. But the law doesn't specify what an "adverse action" is or how you're to be informed of the action. So by asking, you'll remove any doubt and can also find out what it would take to improve any problem that might exist.
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