Affordable Auto Insurance and Your Insurance Credit Score

Car driving on bridgeHave you ever had the experience of receiving a letter from an insurance company notifying you that based on your insurance credit score, you weren’t eligible for the affordable auto insurance you were looking to get? If so, you are not alone. A good number of insurance applications for a lower premium are rejected on the premise of their current insurance score.

What is insurance score and how does it determine your premium?

In a nutshell, your insurance score or insurance credit score, is a calculation of your credit information. The formula and premises used vary from one insurer to the next. However, insurance companies take into account two common factors: your credit history and insurance claims history. If you have an excellent credit rating and no history of insurance claims, you are more likely to receive a high insurance score. And with this high insurance score, your chances of obtaining affordable auto insurance are relatively high.

Your Credit History

When insurance companies check your credit history, they are not only looking at your overall payment history, but also at your credit behavior in terms of how much you charge on your credit cards and how much you owe in loans.

Where loan providers look at your income and ability to pay, insurance companies do not take this into consideration at all. Your income has little to zero effect on your insurance score.

Based on the insurer’s analysis of your credit behavior, they will determine if you are likely to file a claim—and the more likely you are of filing a claim, the lower your insurance score will be.

While your prospects of obtaining affordable auto insurance may seem bleak at the moment, there are things you can do to improve your insurance score. The most immediate thing you can do is to cut down the usage on your credit cards. It doesn’t matter to the insurer if you pay your credit card dues on time. What matters to the insurer is how much you regularly charge on your card/s. You should also consider closing your extra credit card accounts if you have several of them. This can significantly improve your insurance score.

If you need professional assistance in obtaining affordable car insurance, we recommend that you contact us right away. You may reach us at 866.822.7755.