Depending on where you live, did you know that your credit score may be affecting your car insurance policy? In a recent study that utilized data from almost 43,000 insurance quotes, results showed that drivers who have credit scores of 750 or above spend an average of $783 per annum less on insurance than drivers in the same age group with lesser credit ratings. In fact, hypothetically, a driver who maintained such a high credit rating from the age of 25 until she retired would save approximately $23,000 on premiums… enough to buy a new car!
Good Credit Means Less Risk for Your Car Insurance Policy
For insurance carriers, the reasoning behind lower rates for those with high credit scores is clear: somebody with a consistently high credit score is less of a risk, as she is less likely to default on payments. In addition, a high credit score is statistically associated with more responsible behavior that reduces the number of claims filed over the course of the policy. Though many consumers find this unfair and hold the opinion that insurance rates should be based primarily on a driver’s Motor Vehicle Record and the value of her vehicle, there are only three states that currently prohibit the use of credit scores in determining insurance rates: California, Hawaii and Massachusetts. This means that if you live in any other state and have a credit score of 750 or more, your car, truck or SUV insurance rates might be less than those of another driver with the same vehicle, driving record and insurance policy!
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