Auto Insurance Score – Good to go insurance

auto insurance score
The new insurance pricing model is based on an auto insurance score. We all know that car accidents and unexpectedly at vehicular fault collisions can cause our insurance costs to go up. While this is perfectly true, there is a new culprit that many people are unaware of that can cause your premiums to shoot upward. While you may never have even been in a car accident, or have a near perfect driving record, your rates could still go up dramatically. The main ingredient in this is actually your credit score.

Credit scores affect insurance rates
In recent years, both large and small insurers have placed greater emphasis on a person’s credit rating in determining auto insurance rates. They have coined the term credit based auto insurance pricing. The auto insurance companies get your credit information just like any bank would, from the three major credit bureaus.

In the last five years or so insurers have placed as much, or in some cases more emphasis, on your car insurance score than your driving record. This is because even though you may have a great driving record today, if a personal bankruptcy likely looms down the road based on your credit report, social changes are more likely to appear in your life.

These extra life stresses brought on by financial problems can induce increased drinking, drugs, divorce and depression just to name a few. Personal lifestyle changes of course can greatly affect driving behavior and lead to accidents and even automobile deaths and insurers know this all too well.

How auto insurance score affect premiums

It tested car insurance rates for a 30 year old male driver from Tampa Florida, with a clean accident record. The yearly premiums for this driver were about $1,500. Then, with the same driver having had 1 accident, the average auto premium jumped to just $1,800 annually.
average premium
Contrast this same prototype driver who now has a very low auto insurance score due to a poor credit rating and that premium sky rockets to $2,450 annually. That is roughly a 65% rate increase, just based on a poor credit rating. If a driver remained with poor credit for five years, then this would add up to a $5,000 penalty.

If you are already bewildered don’t worry, it gets even more confusing
A driver who has a bad credit score who also makes three or more loan applications per year will get hit even harder by insurers. This is because all of the insurers run advanced algorithms that correlate accidents with thousands of factors, including taking out loans.

So for example, if a person has taken out three payday loans in a year, that information, although you may want it to remain private, will show up sooner or later on your insurers computer pricing software program. The lesson here is to keep your credit in good standing and loan applications as low as possible, if your want to get great auto insurance prices.

Good auto insurance score credit mean cheaper insurance

Now you kbad credit scorenow one of the best ways to get cheap auto insurance is to have a great credit score. If you have a good score, be diligent and keep it high and your financial life will be so much less expensive, not to mention less stressful. If on the other hand you have a really bad credit score that’s hurting your ability to get cheap car insurance, there are a few things you can do.

1. Consolidate debt at a lower interest rate
Join a credit union and apply for a loan consolidation loan. Rates can be half those of credit cards and much less than traditional banks. Once you have consolidated your high interest credit cards, make more than the monthly payment towards this debt. Over time your credit score will go up, you will have more savings set aside and will qualify for lower automobile insurance.

2. Always pay your bills on time
Even if you have a small bill such as a $45 electric bill, pay it on time, every time. This simple act will raise your score quite a bit.

3. Don’t apply for more than two loans per year
more than two loans a yearTry and keep your loan applications to a minimum and you will see your credit score rise.

Shop online for cheaper auto insurance

Ok, so you don’t have the best automobile insurance score, but you still need affordable car insurance. If this is the case, get several online auto insurance quotes and compare rates.

The best deals on auto insurance today are found online

Even if you have a low auto insurance score, with just one hour of your time you can save 30% or more. Apply now for your free rate quote and see how easy it is to save on automobile insurance.

by Toni Kohonen