Auto Insurance Customers With Poor Credit Pay up to 60% More

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Feb 27, 2023, 10:37 ET

TAMPA, Fla., Feb. 27, 2023 /PRNewswire/ -- AutoInsurance.org recently released its list of the 12 most significant factors that affect auto insurance. While most people aren't surprised to read that a driver's history of accidents and traffic violations made the list, many did expect to see that credit score matters as much as it does.

According to the report, a low credit score could result in up to 60% higher car insurance rates. With that much at stake, insurance policyholders should look for ways to improve their credit.

Melanie Musson, a nationally recognized car insurance expert with AutoInsurance.org, shares, "It's unlikely an insurer will run a policyholder's credit once their policy is established. Since credit score significantly impacts rates, the policyholder should request an updated credit report check."

The practice of relying on credit reports to determine auto insurance premiums is controversial. Insurance providers point to the statistical connection between lower credit scores and an increased risk of claims filing. Still, several states have legislation banning or restricting insurers from using credit scores for assessing risk.

In addition to credit score, AutoInsurance.org lists the following factors as contributing to insurance premiums:

State requirements
Policyholder age
Vehicle make and model
High-risk traffic violations
Driving record
Marital status
Gender
Annual mileage
Driving experience
Location
Driving history

Some other factors in this list are as controversial as credit scores. And one of those is location. Insurance companies using location to calculate rates have prompted opponents to accuse insurers of discriminating against policyholders in specific neighborhoods.

Insurers have a reason for this practice, though. Individuals who live in areas of high traffic and high crime have a greater risk of being involved in an accident or having their vehicle vandalized or stolen. Insurers couldn't stay solvent if they didn't accurately analyze their risk when underwriting policies.

AutoInsurance.org provides tips for reducing auto insurance costs, no matter the individual's risk level. Those tips include the following: