By The Numbers: Credit Scores and Car Insurance

Did you know your credit score can influence your car insurance rates?

You probably answered a big "YES" if you read personal finance blogs.

If not, here are five quotes to explain what is going on, by the numbers…

	"According to a study by Conning and Co., more than 90% of auto insurers use a credit scoring system called an insurance risk score to determine how likely you are to file an insurance claim." Credit.com: Credit and Car Insurance
	"Drivers with the best credit scores were involved in about 40 percent fewer accidents than those with the worst credit scores." (per the Texas Department of Insurance) Kiplinger: Ask Kim Your Credit-Score Questions
	"If the same driver instead fell into the lowest ranking in State Farm’s credit-scoring system, however, his premium would shoot up to $2,600." (from $1,251) MSN: The Secret Score Behind Your Auto Insurance note — extreme example… your mileage may vary.
	"About two-thirds of 1,578 consumers surveyed for a report last year by the Government Accountability Office did not know that their credit histories could affect their insurance premiums." MSN: The Secret Score Behind Your Auto Insurance
	"Once your credit score is above 650, you can contact your insurance company to ask for a rate adjustment or shop around for lower rates from a new insurer." Credit.com: Credit and Car Insurance
	note — research by companies like Consumer Reports says insurance companies use credit scores differently, so it might not be a one-size-fits-all recommendation.

I’ve heard about this for a long time, but I had to see it with my own two eyes to sink in. Just by combining our accounts post-marriage, one higher score and one lower score, the person with the lower score qualified for a discount in the neighborhood of 40%!

bottom line: this is not an abstract concept… it has a real impact on your money!

So what next?

1.) Know your credit history 2.) Clear up any mistakes. There is a ton of information about credit scoring online. More than I can get into here. The best place to start might be at the FTC which leads to AnnualCreditReport.com. If you still have any questions, search the FICO forums at myFICO.

3.) Find the right insurance for you. As I discovered in the Anatomy of Car Insurance, almost no two companies evaluate the same driver the same way. It might take some time before you find the best match. But the more you are currently paying for insurance, the bigger your potential savings.

note - for similar posts on other money-saving topics, subscribe to Financial Ramblings via email newsletter or RSS feed.

• Recent Posts

• • Crazy Dreams About… Stock Market Charts
  • GoogleTrends: Uptick in Searches for Deflation
  • On Twitter, I Think…
  • What It Felt Like To Buy Stocks In October 2008
  • Hiding Out From The Personal Finance Fun Police
  • The One Financially Appealing Thing About Buying A New Car
  • Unwelcome Shocks To The Local Used Car Market?
  • This Stock Market Is Wearing Me Out… In A Good Way
  • Getting Ready For End-Of-Year Stock Market Predictions
  • The Most Beautiful Way To Save Money While Heating Your House

• Blogroll

• • Asset Allocator
  • Budgets Are Sexy
  • Dog Ate My Finances
  • Fighting Foreclosure
  • Money Beagle
  • Money Energy
  • Sentient Money
  • Yielding Wealth

• Disclaimer

• Information shared on this site does NOT constitute professional financial advice.

• Advertisements

• Get The Wall Street Journal for 75% off!