Influence of Credit Score on Car Insurance

The credit score of an individual is dependent on several financial aspects of an individual. Credit worthiness is an indicator of how financially trusted an individual can commit to.  Car insurance, especially the premiums part of it, is influenced by several parameters such as your driving history and the type of vehicle that you drive, but more importantly is the credit score will in most instances influence what you pay for your auto insurance.

Care insurance premiums are generated or in simpler terms, the figures are arrived at using certain specific rating criteria such as; the age of the driver and therefore their experience in driving; the purpose for which the vehicle is expected to serve; claims and driving background.  The location (geographical), your credit record, the make, and the model of your car.

How does credit score influence car insurance rates?

The question of does credit score affect car insurance is a very common concern and has been asked by so many people already. Institutions such as the Nationwide make use of an individual’s credit-based insurance index in establishing the amount to be paid by this person in premiums.

Research and statistics have proven that the application of an individual’s credit score in determining this aspect is better serving in predicting the insurance loses in terms of probability. Up to 90% of all insurers in this era go for prospective policy holder’s credit score as a means to calculate the auto insurance premiums.

Credit-based insurance score gives insurers the opportunity to come up with the most ideal and fair rate that the insured is liable for. A good credit score does not necessarily translate into a good car insurance score because insurers will not automatically consider the credit as financial institutions actually do. They only pay keen attention to factors that pose as a potential loss.

General insurance

The fact that life is subject to multiple risks makes general insurance a cover worth considering. General insurance gives the insured the ability to protect themselves together with the things that they consider valuable. These could be their home, vehicles and other valuables. These properties are put under protection from financial losses that may arise following incidences of accidents such as fire, theft and natural calamities such as floods or earthquakes. This kind of cover is also able to shield you from the costs of legal suits that may be taken against us.

There also exists a relationship between credit score and general insurance when it comes to the valuation of the amount that has to be paid as premiums by the insured. Insurers will always look at your credit score as a means to best predict what you are supposed to pay as premiums. General insurance does not necessarily constitute of health and life insurance.

Credit score in car insurance

As mentioned, taking a general insurance cover also protects your vehicle against the insured risks. His is why it is always advisable to be clear before venturing into a particular cover. Credit score is therefore a very critical consideration for insurers when establishing and predicting what the policy holder will pay as premiums depending on the payment scheme that best works for them.

People can raise or improve their credit score through multiple ways. It is often a good idea to live on a positive credit, as this will benefit you during those rainy days when you need your credit score to actually stand in for you to be able to qualify for a commodity or service that you are interested in. Most ideally, managing your credit worthiness is a personal responsibility because it speaks a lot about you as a person. That notwithstanding, your credit score should never keep you from taking an insurance cover because there is always a way around every situation.


It does not matter if you are naturally a person that worries a lot or an optimistic person. Buying an insurance policy is a very good move that everyone is advised to go for as this will cushion them from a lot of financial losses in the event of the insured risk. The bottom line remains that having a policy and therefore a cover in place will most certainly give you the peace of mind that you may ever get from anywhere else.

More importantly, there is the chance that you nay ever need to use the cover because the probability of an accident is slim to none. Besides, taking out insurance signifies that you are not in the receiving end of the unexpected calamities on your own.

Leave a Reply

Your email address will not be published. Required fields are marked *

Captcha *

This site uses Akismet to reduce spam. Learn how your comment data is processed.