Does my Credit Score Affect my Insurance Rates?
Answer:
Yes. Most insurance companies use your credit score as a determining factor when


deciding how much to charge you for insurance. The reason a person’s credit score is weighed into the equation is because the insurance companies have studied credits scores and risk. Those who pay their bills on time are considered more stable and stable people are considered less of a risk.

Individual states set the rules that govern insurance and whether or not the insurance companies can use credit scores when calculating insurance rates. Check with your state’s department of insurance to find out if credit scores are allowed to be used by insurance companies when determining rates.

While lenders are interested in your credit score as a measure of your ability to repay the loans, the insurance companies are interested in determining what type of person you are. Those whose credit is maxed out or shows a history of unreliable payments will be looked upon as reckless and risky. If you have a bad credit score and live in a state that allows your credit information to be used when calculating insurance rates, you can expect a higher premium.
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