It may surprise you to learn that when evaluating your car insurance premium, many insurers will do a scan of your credit information. Technically, having bad credit does not make you a more dangerous driver.
However, in terms of perception, your insurance company may feel that there is a correlation with those who have financial trouble and those who are reckless behind the wheel. All of this translates into an increased amount of risk to insure your driving – and the higher the risk, the higher your premiums.
The amount your credit history affects your premium will generally depend on the provider. Some insurers may see bad credit as a less reliable indicator of a person’s driving habits. Each insurance company uses its own internal formula to determine your level of risk. [Read more…]