The Impact of Credit Scores on Auto Insurance Rates

When it comes to auto insurance, many factors influence the rate you pay. One of the less obvious factors is your credit score. Understanding how your credit score impacts your auto insurance rate can help you make informed decisions and potentially save money.

A credit-based insurance score is different from the credit score you might be familiar with, such as those used by lenders to determine loan eligibility. A traditional credit score can help predict your likelihood of being 90 days late on a payment, whereas a credit-based insurance score is designed to predict your likelihood of filing an insurance claim that will cost the company more than it collects in premiums.

How Credit Scores Affect Auto Insurance Rates

Insurance companies use credit-based insurance scores to assess risk. Studies have shown a correlation between lower credit scores and higher claim rates. As a result, individuals with lower credit scores may pay higher insurance premiums. In some states, the difference can be substantial, with poor credit potentially adding to annual premiums.

Not all states allow insurers to use credit scores to determine auto insurance rates. For example, California, Hawaii, Massachusetts and Michigan have strict regulations or outright bans on using credit information to set insurance premiums. Georgia allows insurers to use credit scores to help determine insurance premiums.

In addition to your credit score, insurance companies also typically consider your driving record, location, vehicle value and the coverage you choose. Always consider the various factors that influence your rates and explore options to find the best coverage at the most affordable price.

How to Get Auto Insurance in Georgia

Contact King Insurance in Jonesboro, Georgia, to explore your auto insurance options and get a personalized quote.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.