Here’s how your credit can affect the cost of insurance:
- Your credit score is a component of a credit-based insurance score. Studies show that using this score helps insurers better predict insurance losses.
- Most states have laws governing how insurance companies can use your credit score in calculating your insurance premium.
- Maintaining a high credit score can help you save on premiums.
Q: My high credit score helps me in a number of ways. Does having good credit also mean I’ll pay less for car insurance?
Angelini is a Farmers Insurance® agent in Half Moon Bay, California. He discusses how credit scoring plays a role in auto insurance rates.
A: In most states, insurers can use your credit history as one factor in setting premiums. Customers with high credit scores tend to pay less for car insurance than those with low credit scores. Your credit history matters, but it is only one of many factors used in calculating your premium.
I’m in California, one the few states where credit scoring isn’t used at all. Here, we look at things like your mileage, driving record, age and location. Other states use these same criteria to varying degrees, along with additional ones, like your credit-based insurance score.
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