How Bad Credit Can Affect Car Insurance Rates

PRLog (Press Release) - Jan. 25, 2013 - For years, creditors have been using credit scoring systems to determine if a consumer will be a good risk for credit cards, auto loans, and mortgages. These days, many more types of businesses that include insurance companies and phone companies are using credit scores to decide whether to approve them for a loan or service and on what terms. Auto and homeowners insurance companies are among the businesses that are using credit scores to help decide if the consumer will be a good risk for insurance. A higher credit score means a consumer is likely less of a risk, and in turn, means they will be more likely to get credit or insurance or pay less for it.

Some insurance companies also use credit report information, along with other factors, to help predict the likelihood of a consumer filing an insurance claim and the amount of the claim. They may consider these factors when they decide whether to grant the consumer insurance and the amount of the premium they charge. The credit scores insurance companies use sometimes are called “insurance scores” or “credit-based insurance scores.”

If a consumers has been denied insurance or did not get the rate or terrms they wanted, then these people should ask ask questions:

They should ask the creditor or insurance company if a credit scoring system was used. If it was, they should ask what characteristics or factors were used in the system, and how they can improve their application.

If they get the insurance, they should ask the insurance company whether they are getting the best rate and terms available. If they are not, they should ask why.

If they are denied credit or not offered the best rate available because of inaccuracies in their credit report, they should make sure to dispute the inaccurate information with the credit reporting company.

More information on how credit scores and credit reports are used to calculate what a consumer will pay for car insurance can be found at http://www.badcreditmd.com/How-Bad-Credit-Can-Affect-Car-....

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