When you are shopping for affordable auto insurance, you’ll probably notice how many factors affect your rates. Accidents on record, the make and model you drive, and many other things are considered when preparing a car insurance policy. Forbes studied car insurance rates in relation to credit scores, and they found that those with poor credit usually see an increase of around 76% on their rates.
How Exactly Are Your Insurance Rates Affected by Poor Credit?
Auto insurance providers frequently cite research that finds credit-based insurance scores are a good way to determine if a driver will need to file claims. The Federal Trade Commission Report has conducted frequent studies that have seemed to verify the fact that a driver’s credit score is correlated with their risk, as delinquent behavior regarding financial matters finds its way into other areas of life.
How Long Do the Effects of Bad Credit Weigh on my Premium?
Traffic tickets are unique in that they can drop off your driving record and not influence your rates after three to five years, but a bad credit score or bankruptcy can have a more lasting impact on your rates. The best way to keep your credit from affecting your auto insurance premiums is to find ways to raise your credit score. When you see your score go up, see if you can get lower rates.
Things like bankruptcy can affect your credit score and therefore your rate, but there is still good news! After you complete your filing, your credit score will sometimes jump back up after only 4 months instead of the dreaded five years some people suffer through. Every situation is different, and not all results will be the same.
Is Poor Credit as Bad as Accidents or DUIs on Your Record?
Some providers are intent on increasing your rates due to poor credit more than things like speeding tickets. When you get a speeding ticket, your rates usually rise by about 21%, but having bad credit can rise them about 76% annually. If you have an accident where you are the driver at fault, the average rate increase is around 41%. A DUI is a very serious offense, and it comes with a hefty hike of around 74%.
Here are some of the ways you can try to obtain decent rates even with credit that has been affected:
Don’t be shy to Ask for Help:
When it comes to your financial livelihood, you can feel good about asking for discounts. You can choose not to have your bills mailed to you or bundle your auto insurance with other options to shave a few extra bucks off your premium cost.
Prove You Are Safe on the Road:
There is no reason to be leery about having your behavior monitored when you are doing an awesome job behind the wheel! Safe driving monitors can yield you rewards in the long run, and you can enjoy discounts of up to 40% with many providers. Technology has allowed for many ways to check up on drivers to assure that you are following the rules, keeping your speed down, and even how often you drive.
Be Sure You Are Comparison Shopping:
It is easy to go with the first provider you find, as your search will be over, and you won’t have to do time-consuming comparisons. However, it is best to look around once a year to ensure you are getting the best rate. Some providers may greatly value your credit history, and some may tend to be more lenient while looking at other aspects that allow them to properly cover you.
At Alexander Insurance, we will always keep you our number one priority and provide world-class coverage during uncertain times. We will always be here when you need us, and we consistently make progress and offer more coverage options with your bottom line and longevity in mind!