Credit History Factors and Car Insurance Rates

Credit History Factors and Car Insurance Rates
 

Insurance companies use many factors in determining your credit score. Here are some examples of those factors:

. Public records: bankruptcy, collections, foreclosures, liens, charge-offs, etc.
. Past payment history: the number and frequency of late payments and the days between the due date
  and late payment date.
. Length of credit history: the amount of time you have been in the credit system.
. Inquiries for credit: the number of times you have recently applied for new credit, including mortgage
  loans, utility accounts, and credit card accounts.
. Number of open lines of credit: the number of credit cards, whether you use them or not.
. Type of credit in use: major credit cards, store credit cards, finance company loans, etc.
. Unused credit: how much you owe compared to how much credit is available to you.

Your insurance credit score may differ from company to company, as they will use different factors in determining your premium. 

Since each insurance company uses different techniques to determine your credit score it is hard to tell you what a good credit score is. Usually a good credit score will result in lower premiums.

Your agent or company is not obligated to tell you your credit score. In fact, they might not even know what it is. All they usually know is that your credit score qualifies you for a specific rate or policy. Some companies also offer better rates under each qualifying tier.

If you feel that there is incorrect information on your credit report, you should tell the credit bureau. The three national credit bureaus are:

. Trans Union (www.transunion.com or 800-888-4213)
. Equifax (www.credit.equifax.com or 800-685-1111)
. Experian (www.experian.com or 888-397-3742)

Also, tell your insurance company. Do not wait until the credit bureau investigates the errors to contact your insurer. If the errors are big, it can make a significant difference in your premium. Some companies are unable to adjust the premiums until the score is corrected, but it does not hurt to ask.

Credit History Affect Car Insurance Rates

How Does Credit History Affect Car Insurance Rates?
 

Many personal car insurance companies consider your credit information when determining how much premium to charge for your insurance. So if you are calling around for new car insurance, keep in mind that many insurers are looking at your credit history to determine your car insurance rates.

The reason some insurance companies use credit information is because they feel there is a direct correlation between a consumer's credit history behaviors and expected claims that may occur.

Many insurance companies still use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance. Therefore, if you have not established a credit history yet, the companies that use credit history may not be best for you. 

The companies that do use credit scoring will still use other factors that determine your premium. They will also use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance.

If you feel that your credit history is better than the insurer can find, make sure the insurer has your correct name, address, social security number, and date of birth.

Some insurance companies will look directly at your actual credit reports when determining your rate, however most will use what is called an "insurance credit score." An insurance credit score is developed by using statistical techniques and methods to predict the likelihood a consumer will have a higher than anticipated losses. These are similar to what lenders use to predict the reliability of an applicant repaying a loan.

Auto Insurance Tips for Senior Drivers

Like all drivers, seniors want to get the best rates on their auto insurance policies. What they may not be aware of is that older drivers may present a higher risk than other drivers, usually leading to higher auto insurance rates.

Following a few simple tips and taking these measures will ensure you are getting the lowest rates possible on your auto insurance policy.

1. Avoid more accidents and pay close attention at intersections. Auto accidents involving seniors often occur at intersections. Pay attention to protected left turn lanes with their own arrows and always keep your tires pointed straight ahead when stopped, so that a rear-end accident doesn't push you into oncoming traffic.

2. Follow the flow of traffic and drive at or near the speed limit. Driving too slowly can be just as dangerous as speeding, especially when entering or exiting interstates or freeways. It can also trigger dangerous "road rage" in less patient drivers. 

3. Many violations include failure to yield right-of-way, improper turning or incorrect lane changes, so keep current on the traffic laws relating to new traffic designs.

4. Sit high enough in your seat so that you can see at least 10 feet in front of your car, advises the National Highway Traffic Safety Administration. If your car seat does not adjust to allow this, add a cushion. This will make it easier to see pedestrians and bike riders, and reduce problems from oncoming headlight glare at night.

5. Senior drivers can refresh their skills and knowledge -- and get a discount on auto insurance coverage in many states -- by taking a refresher driving course, such as the eight-hour "55 Alive" course offered by AARP. More than two-thirds of states mandate auto insurance policy discounts for such courses, and many insurance companies offer the discounts voluntarily.

6. Consider fit and comfort in your new car. Seat belts that comfortably fit over your shoulder and low on your lap will keep you safer. Automatic transmission, power steering and power brakes require less physical effort.