What car insurance companies do not use credit scores?
Do all car insurance companies use credit scores when determining your car insurance premiums? Car insurance rates are calculated by risk formulas unique to each car insurance company. A large number of factors make up the car insurance premium calculation but it all boils down to the likelihood of a driver incurring some kind of loss – whether that loss is from auto theft, a car accident, vandalism or any incident which requires a car insurance company to pay a claim.
“ The risk level you represent is really what your premiums stand for “
Car insurance rates are not just based on you as an individual but also your age group, the make and model of your car, where you live and many factors that are not unique to you but part of the larger risk formula. The use of credit scores is one of the newest additions to the risk formula and one of the most controversial.
Why Credit Scores Affect Car Insurance Rates
Studies have shown that credit scores strongly indicate how likely a person is to file a claim.
Someone with a poor credit score is proven to have a stronger tendency to file an auto insurance claim than somebody with good credit. Industry experts predict that 90% or more of car insurance companies use credit scores as a factor in calculating premiums.
Many consumers argue this correlation between car insurance claims and credit scores however how exactly do you dispute this and make a difference? Almost all states have adopted laws for how insurers can use consumer credit information but at the end of the day the insurance companies work their magic (like credit card companies) to factor risk in one way or another.
All you should remember is a good credit score will help you get better auto insurance rates. A bad credit score will only hurt you.
What Car Insurance Companies do not use Credit Scores?
You may be up against a wall to find a car insurance company who does not use credit scores and this is why car insurance comparison for people with poor credit is more important than ever. Although your score may be low some car insurance companies look at your overall profile. Credit scores are not an exact science and some car insurance companies underwrite based on the entire profile of the report – not just the score.
You also should realize that some estimates show over 30% of credit reports have errors so before shopping for car insurance its critical you get a copy of your credit report to make sure any errors are corrected and the score fairly represents your credit history.
Google it ! Don’t forget to search the web for key terms such as “no credit check car insurance” or “no credit auto insurance” or “no credit check insurance”. The more detailed a search you can provide in a search query the more relevant your results will usually be. Since over 90% of car insurance companies use credit scores its highly doubtful you will find any right away simply by searching for general terms like “car insurance” or “car insurance rates”
How to Improve Your Credit Score
You need to understand what a credit score is and what exactly is on your credit report before having any success in improving your score. Much like education is the key to the best car insurance rates credit education is the key to a better great score.
First order is to get copies of your credit report AND score from all 3 major credit reporting bureaus – Experian, Equifax and TransUnion.
You are entitled to one free credit report a year however scores are not included so its worthwhile to always purchase your report. Review your credit report and note any errors disputing these with the credit bureaus. Most disputes are handled within 30 days and many consumers report a drastic increase to their score simply by challenging older items. Once your credit scores improve you certainly can get better rates and have a wider choice of car insurance companies to choose from.
How to Get the Best Car Insurance Rates?
Compare. Whether you have bad credit or good credit you need to start car insurance quote comparison online and compare at least a few providers. Always remember to compare apples to apples including types of coverage, policy limits and deductibles – never focus just on the premiums. Start car insurance comparison online today with free car insurance quotes