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How Credit Affects Rates


Individual Credit Scores Directly Impact Car Insurance Rates

Personal credit scores have a huge impact on car insurance premiums. Most people cannot comprehend why credit plays such a major role in the issuance and relative cost of auto insurance coverage. The perception that applicants with low credit scores present higher risks is the underlying rationale used to justify this industry mentality. Much controversy surrounds the practice of basing auto insurance prices on prospective policyholders' individual credit scores, however.

While no perfect argument for or against credit-based auto premiums currently exists, commentators on sides of the matter have many valid points.

Pecuniary paradox of major proportions

Motorists with perfect driving records and poor credit scores understandably resent having to pay higher car insurance premiums. Credit-based auto insurance rate supporters posit that credit score evaluations enable more accurate risk management. Opponents urge that ubiquitous “fishing expeditions” into peripheral economic matters leaves too many doors open far too widely for comfort. Indeed, sufficiently serious dispersions have been recently cast on credit-based car insurance rates that many states have enacted legislation prohibiting the practice.

Facing harsh financial facts

Regardless of which side of the fence you find yourself on, the fact remains that credit scores indeed affect auto insurance costs. Maintaining great credit and cheap auto insurance premiums go hand in hand is the obvious lesson this phenomenon subsumes for prudent consumers.

Inseparable issues of major import

Because cheap car insurance and credit scores are so inexorably intertwined, an “insignificant” differential of 50 to 100 points in your credit score makes a huge difference in the range of premium prices you are offered. Many younger drivers become overextend by impulsive credit binges. Such youthful indiscretion returns to haunt them later in life, however. Prior bad acts have an uncanny habit of resurrecting themselves as higher auto policy premiums and many other exorbitant costs.

Maintaining an optimal overall credit score affords amazing differences in car insurance costs. Different carriers regard identical reports very different when evaluating relative risk levels to establish premium rates. Some do not even take credit scores into consideration. Insurer decisions to factor in this financial indicator is becoming increasingly common, however.

There is hope after all

Regardless of whether your credit rating is fair, poor, or excellent, cheap auto insurance that adequately meets your needs is readily available. You can easily locate it by obtaining free car insurance quotes online from multiple providers. Such comparative analyses allow auto insurance policy selection that best suits your needs in all significant aspects. This approach can also save you many hundreds or thousands of needless annual expenditures to maintain vital car insurance protection.

A mufti-faceted financial matter

Cheap car insurance rates depend on several factors. Your personal credit score is typically a primary issue that has a major impact. Improved credit also reduces car insurance costs. Other factors also play a role, however. These include your driving record, annual vehicle mileage accumulation, your car's make and model, and where you live and work. Free online auto insurance quotes offer the best odds of obtaining cheap car insurance coverage.

Construct a permanent monetary edge

After identifying and buying the ideal auto coverage, you can hedge future insurance bets considerably. Prompt bill payment, safer car selections, and strict traffic law adherence virtually guarantee eventual victory in the Affordable Car Insurance Battle.

The right auto insurance plan for ALL makes and models!

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