A credit score is almost becoming as valuable as your social security number or the money that you have in the bank. In years past the score was linked only to your potential financial risk. It determined whether or not an institution would lend you money and at what interest rate you would pay the money back. While those things are still relevant today, the credit score has been moving into other aspects of your life, including your car insurance premiums.
Car insurance is a necessity. No matter where you live, in order to drive on the street you have to have car insurance. It protects you as well as the other drivers on the roads from any damage that may happen to the vehicles or the people inside or outside of them. Premiums were based on your driving record, the type of vehicle that you drove and even where you lived. Now, the credit score is also being examined. But what does this have to do with car insurance premiums?
Car insurance companies believe that individuals with a lower credit score are more likely to get into accidents and file claims. Just like being a financial risk, they believe that a person with a low credit score can also be another type of risk, this one involving a car. The fairness of this practice has been an ongoing debate between insurance companies and the individuals they cover.
Those with a better credit score can expect rates lower than their counterparts with a less favorable score. This means that if two drivers have the same driving history and live in the same area, but have different scores, they will be paying different premiums. For those with a better credit score this seems like a real benefit. Those with a clean driving record and having never been in an accident can end up paying more than someone with a bad driving history with stellar credit.
Shopping around is one of the best ways to achieve a better car insurance premium. All insurance companies are not equal and some use a different calculation process when they provide new customers with a quote. Take your time and look around for a company that can provide you with affordable insurance. In some instances you may even consider taking less insurance than you would normally purchase in order to offset the cost.
Keep an eye on your credit score as well. If you notice something that doesn’t look right, it is in your best interest to look into it and make sure that it is corrected. When you know that it affects more than just your ability to borrow money you are going to want to keep a close eye on what the credit reports say about you and your spending.
If you know that your credit score isn’t where you want it to be, your car insurance premium may be a motivation to get things back on the right track. In some cases you can save money with a better credit score. This may be true with the interest rate that you pay as well as the premium for car insurance that you pay as well. Whether you pay by check, debit card or even a Tesco credit card you don’t want to pay more than you have to for car insurance.