Do you have a squeeky clean driving record but pay ridicolous amounts for your car insurance? A new study from WalletHub has revealed that your credit score my be the cause for your high rates. The study found that the top 5 auto insurance companies use credit score as a factor when deciding on your insurance premium.
The cost of having a bad credit score can weigh heavy on your pockets.
In some states like Arkansas your insurance cost can increase by 73% when your credit score is lower than average
An advisor from WalletHub explains why the cost of insurance is effected by youur credit score.
“It has to do with, ‘Do you have a history of paying your bills, and do you think that history will carry on when paying out your insurance premiums?’” she explains. “I think that’s really where the mindset is here. I would say it’s more of a cost risk than an actual driving risk.”
With companies like AllState and Farmers, the cost of your auto insurance depends greatly on your credit score. Although GEICO do not take your credit score into consideration as much.
The advisor at WalletHub continued to say:
“Depending on where you live and who your provider is, people with no credit – so, those are people who may be recent grads, people who are simply unbanked, people with no credit – pay on average 65 percent more for car insurance than people with excellent credit do”.
In summary, by improving your credit score, your auto insurance will become cheaper (this is the case for most states).
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