Does My Credit Affect My Car Insurance Premium?

When it comes to auto insurance, there is never a one-price-fits-all scenario. While there are many factors that cause the costs to vary from driver to driver, carrier to carrier, and state to state; did you know that your credit history can impact your car insurance premium?

Insurance companies will only use a soft inquiry when pricing your coverage. These types of inquiries will not affect your credit score and you can shop your coverage around until you find the policy that fits you just right. Using a credit-based insurance score when determining premiums helps to better predict insurance losses. It has been shown that individuals with higher credit-based insurance scores typically have fewer claims over time.

While several factors contribute to determining an individual premium, some factors related to your credit that may be used are your payment history (including delinquencies or late payments), the length of your credit history, and the types of credits (e.g. credit cards or loans).  Using a credit-based insurance score allows you to possibly even pay a lower premium than if your credit wasn’t used as a factor during the quoting process.

Being that your credit score often changes, it is important that you talk to your agent on a yearly basis to make sure you are getting the most out of a credit-based insurance premium.


About the Author

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Lisa Jewell is an Advisor in the Private Client division of Bouchard. Lisa specializes in high net worth personal insurance that focuses on successful individuals with more complex insurance portfolios and exposures in all 50 states.  | Connect on LinkedIn