Does Your Credit Score Impact Your Car Insurance Rates?

car accident

While most people have a pretty good grasp on understanding the standard credit score, a lot of people don’t know how a credit score can impact your car insurance. Your car insurance rates don’t just change based on whether you’ve been in an accident or received a ticket. Car insurance companies use a system with credit-based insurance scores to look at other elements of your life and construct a rate that applies only to you.

Learn more about these credit scores and what they might have in store for you. Don’t wait until your next accident to begin learning exactly how and why your rates my change. Even in the best situations, your insurance rates might seem to go up for no reason at all. You need to contact our Atlanta car accident attorneys right away.

Credit Score Basics

The general thought around a credit score is that so long as you pay your bills on time, your credit score would be okay. But as many adults learn too late into their 20s or 30s, credit scores are much more complicated than paying your bills on time. They look at your job, income level, outstanding debt, payment history, and much more.

However, there are key differences between a credit score and a credit-based insurance score. Yes, car insurance companies do use some parts of your credit score to help determine how likely it is that you’ll be in a crash in the future.

Will Car Insurance Companies Run Your Credit Score?

It is very routine for car insurance providers to run a person’s credit score before they offer a rate. These credit tracks are usually soft credit checks, and you may not even notice them if you routinely track your credit score. Your credit score probably won’t have a substantial impact on your insurance rates. What they’re really looking for is past insurance claims and payment history.

That means that they’re really only considering two elements of the very complex data set that makes up your credit score. They are not concerned with when you took out a car loan or your current income levels.

What is a Credit-Based Insurance Score?

Your credit-based insurance score is a lot more forgiving than your standard credit score. Insurance companies look at factors such as your driving history, claims on insurance records, and your ability to make payments on time. However, unlike a traditional credit score, they do not look at gender, income history, or your job as a factor.

Additionally, your credit-based income score isn’t the end all be all for your insurance premium. Most insurance companies claim that they only use credit-based insurance scores to determine eligibility for certain payment plans. But even nationwide acknowledged that 92% of insurers consider credit whenever calculating an auto insurance premium.

How Can Insurance Companies Determine a Credit-Based Insurance Score?

One of the common misconceptions is that your credit score is calculated on a strict formula. What actually happens is your credit score is calculated by each company individually, and each company can change the weight of certain criteria when determining your score. That is why your TransUnion and Equifax scores can be different.

Thankfully credit-based insurance scores don’t go through this same challenge. The National Association of insurance commissioners does have a structured formula to help determine a credit-based insurance score. This helps insurance providers give about the same quote to the same consumer. It creates a standard within the industry.

Usually, your payment history will make up about 40% of your credit-based insurance score, and your credit history length makes up about 15%. If you’re requesting to pay insurance of purely on credit, then they may attribute 30% of your credit-based insurance group to your current outstanding debt.

Weinstein – Car Accident Lawyers Serving Atlanta, GA

If you aren’t just recovering from an Atlanta crash, then you might have other concerns In addition to how your car insurance premiums might change. After a crash, it is always advisable to speak with a local auto collision attorney. These legal professionals can help layout the standard procedure for resolving a crash and help you make realistic expectations about what to expect in compensation.

Contact The Weinstein Firm for immediate support from an Atlanta, GA auto accident lawyer. Our team excels in handling cases that involve injuries, property damage, and pain and suffering as part of the claim. We understand that as the victim, you shouldn’t have more to do in order to get a resolution, and we’re here to help ensure that this claim is as easy as possible.

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