Cheap Car Insurance Quote

Many auto insurance companies factor in your credit score when deciding how much to charge you for insurance. There’s strong correlation between credit score and your chances of being in an accident. On the average, people with poorer credit tend to have more accidents and insurance claims. What this means is that when you’re calling around to talk to different insurance companies about coverage, they’re looking at your credit score.

Just because a company uses credit scoring doesn’t mean that other factors, such as what make and model car you’re trying to insure and your age, don’t factor in. These other factors are very important and can affect your insurance rates quite a bit.

To make this all a little more complex, you need to know that insurance companies who rate you this way don’t use what we normally refer to as “your credit score”. That’s a score lenders use to determine your chances of paying back money the lend you. Insurance companies use a similar score, but it’s called an “insurance credit score”. It’s basically the same thing, a statistical number that tends to predict your chances of being in a wreck.

This all works out great for folks who have good credit. But what if you don’t have good credit, or what if you don’t have credit at all. Believe it or not, not all Americans gleefully use their credit cards! There are some Americans who pay cash for everything. (Not a bad idea, by the way!) What do these folks do? Well, you’ll have to make sure all the other information the insurance company gathers about you is accurate. You can also talk with more than just a few insurance companies to see if you can find any that don’t depend on your credit rating as much.

Is it fair for your potential insurer to look at your credit information without your permission? Well, yes, it is!

The Federal Fair Credit Reporting Act essentially says that they can use “reasonable procedures” when rating you.

In order to protect yourself, you’ll want to make sure your insurer has your correct name, address, social security number, and date of birth. Note that some insurance companies use your actual credit report (the same one lenders use), but others use a special insurance credit report.

If you find any discrepancies on your credit report, get these cleaned up before you apply for insurance. The discrepancy might not affect the price they quote too much, or it might. Best to make sure that everything is in place before you apply.

Technorati Tags: car insurance, cheap car insurance, credit history, credit score