One question you may have wondered is, does your credit score impact car insurance rates? The short answer is yes if you live in San Antonio TX. The relationship between credit scores and car insurances rates is a little more complicated.
There are multiple risk factors that impact your insurance rate including driving record, gender, age, model of car, where it’s parked at night and credit score. Using credit scores to set insurances rates has been around for over 20-years. A 2003 study conducted by the McCombs School of Business at UT-Austin and a 2007 study performed by the Federal Trade Commission found that there is statistically a correlation between a client’s credit score and the amount they cost the insurance company.
The UT-Austin study analyzed 175,647 random individuals and determined the lower the credit score, the higher probability of loss on a policy. The FTC study determined that credit-based insurance scores are excellent risk predictors in that scores predict the number of claims filed and total cost. Therefore, high-risk consumers pay higher premiums and low-risk pay lower premiums. Insurance companies do not use the traditional score in which clients are accustomed. Instead, they create their own score using Experian or FICO ratings.
Using your credit score as a factor for insurance rate is legal in all states except California, Hawaii and Massachusetts The simple answer to mitigate costs is improve your credit history by paying bills on-time. Regularly check your credit report to ensure there aren’t any errors that could be dragging down your credit rating. Additionally, there are insurance companies that weigh credit score as less of a factor than others, such as Access Insurance Services. Call them today to determine your automobile insurance rate, regardless of your credit rating.