Credit influences insurance rates
credit scores have a surprisingly big influence on what you pay for car insurance.r.
PITTSBURGH — In case you needed another reason to pay your bills on time, a new study by WalletHub has found that credit scores have a surprisingly big influence on what you pay for car insurance.
The study found that insurance premiums among five of the largest auto insurers nationwide averaged 65 percent higher for a driver with no credit history versus someone with excellent credit.
Because many factors go into pricing premiums, the percentage difference won’t hold true for all consumers, the study noted.
Nevertheless, credit scores will have a significant impact on what you pay, said John Kiernan, senior analyst with WalletHub, a Washington social media site focusing on personal finance topics. “Hopefully that will lead people to give a little more TLC to their credit scores, and manage loans and credit cards more responsibly,” he said.
The study found that among insurers, Allstate Corp. relied on credit data the most, resulting in a 116 percent difference in premiums, while State Farm relied on those data the least with a fluctuation of 45 percent. In the middle were Farmers Insurance, Geico, and Progressive.
Mr. Kiernan said consumers could use the results to help them shop for a better rate.
“If your credit standing isn’t great, you might want to gravitate to a company that relies on credit scores less,” he said.
Conversely, people with good credit might want to check first with companies that give credit data greater weight.
The results also help to explain why insurance quotes can vary widely between companies, Mr. Kiernan said.
Read more at http://www.toledoblade.com/business/2014/06/12/Credit-scores-can-influence-car-insurance-premiums.html#Zk37cxz5rlsUPK0A.99