What Car Insurance Companies Don – t Use Credit Scores? #auto #insurance #that #doesn #t #check #credit


Posted On Aug 11 2017 by

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IN PLAIN ENGLISH

Your credit score is one of many factors that the majority – about 90% – of car insurance companies use to determine your rates. And while it is possible to get a policy without a credit check, chances are you won’t want to.

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The long and short of it: not many, and even when companies offer no credit score insurance policies, the policies will include higher-than-average rates. This spike in premium is because credit is considered an extremely meaningful factor in insurance deliberations. Typically, policies that do not require a credit check are sold by high-risk insurers, which makes sense because electing to obtain a policy sans credit check automatically places you into one of the highest risk groups.

But is this a fair practice? Many people say no. In fact, detractors frequently compare insurer’s use of credit scoring to redlining, and state that it discriminates against the 42.9 million Americans with medical debt, minorities, and low-income applicants. For these reasons, the use of credit in underwriting decisions has been ban ned in Hawaii, Massachusetts, and California.

These three states aside, the fact remains: Your credit score is one of the factors that the majority of car insurance companies use when determining what your policy rates will be. And there is a statistical correlation between your credit score and how likely you are to file a claim. Thus, a pplicants with a credit score of 650 or higher will qualify for lower rates. Applicants with low credit scores can potentially offset the increase in rates by taking advantage of pay-in-full or other appropriate discounts. One more pro tip? Track your credit score and make sure to dispute any errors right away.

Favorable credit factors may include:

Established credit history (length and variety are taken into account)

No late payments or past-due accounts

Open accounts in good standing

Unfavorable credit factors may include:

Accounts in collection, bankruptcies, foreclosures or liens

Limited credit history

Numerous hard credit inquiries

Have less than ideal credit? The Zebra compares quotes from hundreds of carriers so you can find the best option for your exact situation.


Last Updated on: August 11th, 2017 at 3:27 am, by


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