Study: Your Credit History Makes Big Impact on Your Premiums
AUSTIN, Texas–(BUSINESS WIRE)–There is yet another reason to make sure you have good credit. According
to a new report
by insuranceQuotes, credit has a significant impact on what you pay
for car insurance. Drivers with poor credit often pay double, or even
triple, depending on where they live.
The study found that if you have fair credit, you’ll pay an average of
28% more for car insurance than a driver with excellent credit (up from
24% in 2013). And if you have poor credit, your premium doubles,
increasing your rate by 104% (up from 91% in 2013) on average.
“What’s really concerning is that 42% of Americans aren’t aware
that there’s a relationship between credit and insurance rates,” said
Laura Adams, senior insurance analyst at insuranceQuotes. “Over 95% of
U.S. insurance companies use credit to set auto premiums in every state
except California, Hawaii and Massachusetts, where the practice is not
Unlike the more commonly understood consumer credit score, which lenders
use to predict how likely you are to repay a debt, a credit-based
insurance score (CBIS) helps insurers know how likely you are to have an
insurance loss and file a claim. The higher your CBIS the less likely
you are to file a claim and the lower your rate.
These states see the greatest premium increases
when credit drops from excellent to poor:
These states show the smallest increase
(excluding HI, MA and CA):
1. Arizona — 226%
2. New Jersey — 216%
3. Nevada — 213%
4. Nebraska — 206%
5. Oklahoma — 201%
1. North Carolina — 51%
2. Virginia — 75%
3. Wyoming — 76%
4. New York — 77%
5. Connecticut — 86%
“Insurance companies set premiums based on the information in your
credit history and typically use it only for an initial quote. So
consumers who have improved their credit over time should request a new
auto insurance rate in order to save money,” said Adams.
“What helps boost your consumer credit—paying credit obligations on time
and not maxing out credit accounts—also helps increase your CBIS and
keeps your auto insurance rate down,” said Adams.
The full state-by-state report is available at http://www.insurancequotes.com/auto/auto-credit-higher-insurance-premiums-101816
Quadrant Information Services and insuranceQuotes calculated the
average economic impact of credit on auto insurance rates using data
from the largest carriers (representing 60-70 percent of market share)
in each U.S. state and the District of Columbia.
Jacob Streiter, 646-695-7047