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Honored Contributor
Posts: 40,072
Registered: ‎03-12-2010

Credit Rating impacts on Car Insurance Rates

This probably has been going on for some time now, but I just noticed in one of the stuffers from my auto insurance company that they solicited credit report information from an agency.

 

Help me understand what the heck my credit rating has to do with my overall car insurance.  I understand that the insurance company wants to be paid on time (and they are).  I understand that the insurance company wants to know if I am a menace to society and have any tickets/points on my driving record.

 

I'm in health insurance which is different from auto - why do you think my credit rating has anything to do with determining risk for auto insurance?.

 

 

There are many elements: wind, fire, water
But none quite like the element of surprise
Esteemed Contributor
Posts: 5,758
Registered: ‎03-09-2010

Re: Credit Rating impacts on Car Insurance Rates

It impacts your Home Owners Insurance as well.

Keep Your Face To The Sunshine and You Will Not See The Shadow
Honored Contributor
Posts: 18,504
Registered: ‎05-23-2010

Re: Credit Rating impacts on Car Insurance Rates

A measure of general reliability in all things. They (some companies) also check the credit reports of job applicants. It's (theoretically, for them) a meadure of whether you are "likely" to be a careful driver, or not. That's the rationale. It has a point in a general (VERY general) way.

Life without Mexican food is no life at all
Honored Contributor
Posts: 20,007
Registered: ‎08-08-2010

Re: Credit Rating impacts on Car Insurance Rates

In a nutshell, they do it because they can. No one has outlawed it, and they can make more money off of someone, although usually those with bad credit don't have much money. Most states require car insurance, and they are looking for ways to make more money. And there might be some numbers that support those with bad credit file more claims, but that is just a guess on my part.

 

My mom has a philosophy that insurance companies are just the mafia without the guns. I tend to agree. They are making billions and billions of dollars off the backs of people who have to have their products. 

Honored Contributor
Posts: 40,072
Registered: ‎03-12-2010

Re: Credit Rating impacts on Car Insurance Rates

I have an excellent credit rating and my no fault on my old car dropped

$40 from the last 6 month period to the upcoming period.  That said, even though my credit rating benefitted this experience, I still think it's stupid.

 

@Mominohio

Your Ma and I need to have a cup of coffee - I agree with her.

There are many elements: wind, fire, water
But none quite like the element of surprise
Honored Contributor
Posts: 11,359
Registered: ‎03-09-2010

Re: Credit Rating impacts on Car Insurance Rates

They have been doing this for at least 20 years now.

Super Contributor
Posts: 495
Registered: ‎09-05-2013

Re: Credit Rating impacts on Car Insurance Rates

There is an article on this subject in this month's Consumer Report magazine.  It was in depth and an eye opener, for anyone looking for more information.

Honored Contributor
Posts: 15,103
Registered: ‎03-09-2010

Re: Credit Rating impacts on Car Insurance Rates

Maybe people with high credit ratings have more to lose than those with low ratings, so they drive more carefully, park their cars in safer neighborhoods, etc.????

 

I know our credit ratings are used for many reasons -- here and there some of those reasons make sense, but those who use them should have to show the correlation ---assuming one exists.

Honored Contributor
Posts: 20,007
Registered: ‎08-08-2010

Re: Credit Rating impacts on Car Insurance Rates


@Bird mama wrote:

I have an excellent credit rating and my no fault on my old car dropped

$40 from the last 6 month period to the upcoming period.  That said, even though my credit rating benefitted this experience, I still think it's stupid.

 

@Mominohio

Your Ma and I need to have a cup of coffee - I agree with her.


@Bird mama I'm sure she'd enjoy that!

Honored Contributor
Posts: 61,509
Registered: ‎03-10-2010

Re: Credit Rating impacts on Car Insurance Rates

I'm sure they view having a good credit rating as a sign of taking responsibility in paying bills which could carry over to driving habits.

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