Your Credit Score and Your Car Insurance Premium

Q: Why does my credit score have anything to do with my car insurance premium?

A: When insurance companies started using credit scores as one of their rating factors there was a huge outrage as people did not understand how their credit score had anything to do with how safe of a driver they were. And honestly, credit score has nothing to do with how safe of a driver you are.

However, that’s not why insurance companies use that as a factor in your premium, you can thank all of the people that have successfully and unsuccessfully filed fraudulent claims in the past. They use your credit score as an indication as to whether or not you are likely to try and commit insurance fraud because you need the money. Insurance companies have stated that they have data that backs their claim that people with lower credit scores are more likely to commit insurance fraud.

With that being said though, some states are working to overturn this rating practice and we will see what happens in the future.