Did Your Auto Insurance Company Check Your Credit?

Auto insurance companies use advanced algorithms that take into account numerous factors when determining your monthly auto insurance premium. Some things that factor into the calculation make sense, like your driving record, claims history, marital status, age, and make/model of your vehicle. Other things, like whether you rent or own your home and your education level, aren’t at all related to your driving habits, and it may seem strange that they should affect your monthly rate.

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Why Did My Auto Insurance Company Check My Credit?

One seemingly unrelated factor that can affect your premium is your credit history. Generally speaking, a driver with an excellent credit score will pay anywhere from $68 to $526 less than someone who has a good credit score, even if their driving and claim history is identical.

What Impacts My Credit-Based Auto Insurance Score?

Your FICO credit score is based on roughly 130 factors. However, there are only about 30 factors that your auto insurance company uses to build a proprietary score that they use when calculating your riskiness. While there are factors that cannot be used to come up with this score, like your age and your occupation, the process is otherwise shrouded in mystery.

Improving Your Credit-Based Auto Insurance Score

A big one is to always keep coverage. Don’t allow any breaks in your auto insurance coverage. Try to keep your car covered for more than the absolute least amount allowed by law. If you insure yourself for more than what the state makes you carry, your rating will be more favorable to you. The score your auto insurance builds and uses is different from your FICO score, so you can’t necessarily use that to guess how your credit is impacting your premium. However, just as you can improve your FICO score over time, you can also take steps to improve your credit-based auto insurance score. Focus on keeping the balance on your credit cards at around 10 percent of the credit limit, pay your bills on time, take care of any outstanding debt or judgements that you have, and report any errors on your report.

Getting a Credit Score Exception

If you are in Las Vegas, Nevada and you have suffered from an extraordinary life event that has a negative impact on your credit history, such as catastrophic event, a death in your family, military deployment overseas, or identity theft, then you may be eligible for an exemption from the use of credit information by your auto insurance provider. State law allows your insurer to require written and verifiable documentation that such an event has occurred and that it had a direct impact on your credit score. Your auto insurance agent can guide you through the process if you qualify.

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Your credit history can have a significant impact on your monthly premium, but there are plenty of things you can do to keep your rate affordable. Our licensed auto insurance agents can help you review your policy and discuss the factors that are impacting your monthly premium.

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Read More: Auto Insurance in Las Vegas, Nevada


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DISCLAIMER: It is important to note that the information contained herein is made general for the purpose of explanation.  You should consult your policy for exclusions or other language that may alter your policy.

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