Wednesday, February 5, 2014

Credit rating and auto insurance quotes

When discussing the influence the different factors render upon auto insurance quotes, people often talk about the car being insured, or the driving record of a person possessing it. Some may also take the place of residence or marital status into account, which also matter to a degree. But quite often people overlook a very simple and ubiquitous factor that sometimes has a tremendous effect on auto insurance quotes yet has nothing to do with driving whatsoever. If it's hard for you to guess what we're talking about, it's quite likely that you actually don't know that this factor is taken into account. And that's normal, because insurance companies don't ask their customers to provide their credit rating when getting auto insurance quotes.
That's right, we're talking about credit rating or credit scores, which are based on a person's credit history and have a huge impact on the person's ability to employ various financial instruments such as credits or loans. To put it simple, credit score is a numeric indicator of how good you are when it comes to settling or managing your debts. The better you perform, the easier it is to get more money lent to you on better conditions. Sure, these are the basics everyone knows of very well after getting their very first credit or loan. But what does it have to do with auto insurance quotes in the first place?
Insurers are obsessive when it comes to assessing risk because their revenue depends on how well they are able to do just that. So if there's any piece of information that can help them to assess risk more accurately they will use it no matter how irrelevant this may seem to the general public. That's exactly the case with credit scores. After extensive analysis of statistical data, insurance specialists have identified a link between a person's credit score and claim probability. This link can be expressed in a few notions:
  • People with good credit scores tend to be better drivers and file fewer claims
  • People with average credit scores tend to file insurance claims on average rates
  • People with below the average credit scores file claims more often than the average
  • There seems to be a relation between how a person deals with their finances and how they behave behind the steering wheel
Needless to say, insurers were very happy to find such a relation and they didn't hesitate a moment to lobby a permission that allowed them to access credit score information of their clients without having to notify them about it. And while this may look like a violation of your privacy, there's nothing you can really do about it but comply. It's just the way things work with insurance companies and you only have two options in this situation: search for those few insurers that don't use credit score data or turn it into an advantage by improving your credit rating. The latter certainly looks like a very fruitful strategy.
You see, the credit score is a very important variable that may affect various aspects of your life, not just auto insurance quotes. And it will make perfect sense to do everything necessary to improve the score because the consequences will be very positive from many points of view. That's why instead of getting into pointless battles with insurance companies about your credit score it would be much better if you got a copy of your credit report and hired a professional adviser to work out a strategy for improving your rating. It may be a very tedious and lengthy process, but it will ultimately pay off. And it's not just about auto insurance quotes that will get more affordable as soon as you get a better score - credits, loans and mortgages will become more affordable and easier to get. So think about it and make the right decision when it comes to credit rating.