Why auto insurance premium dependent on credit score? I think it is unfair.?

CA. Auto Insurance guy

For California, my understanding is, a credit score has nothing to do with the "rating" of premium, that is to say its not a rating computation factor. A credit score only determines "eligibility" into insurance programs or the availability of all the payment options. A not so good credit score may not make you eligible for payments in their top tier company that has their best rates so you are offered payments that you qualify for in a lower tier program but has a bit higher rates. However, if you pay the entire term premium in full for their top tier program, the credit score will/should have no bearing on your premium and you will recieve the exact same total premium as a person with a "good" credit score. The good news is there are plenty of insurance companies that do not take credit score into account in offering you their best rates. If you are in California, go to www.qwiksilverinsurance.com for a free on-line insurance quote. Best of luck to you!

oklatom

Your assumption is wrong. A bad driver would a good credit score would not pay less than a good driver with an average credit score. Credit scores tell a lot about a person, but it is only one small factor in the big picture of insurance rates. Driving record and number of accidents would be weighed much heavier than a late payment to sears.

However, if you find a person consistently 90 days behind on all his debts, you might not want to offer him a monthly pay insurance plan.

Any time you want to borrow from someone it's perfectly legitimate to run credit. If you are renting, it's legitimate. If you want insurance, it's still legitimate, despite your feelings about it. I can only assume you have bad credit, or you wouldn't really care. If so, do something to improve it instead of complaining that people look at it.

Queen B

well thats not true. if you are a good driver with good credit, you get a good rate. if you are a bad driver with good credit you will not get as good of rate. if you have points and/or accidents (bad driver) you WILL pay higher rates. the rates are based on a lot more than credit, thats just 1 factor. you are right, credit is used for just about everything now...the insurance industry is just catching up. many studies have been done and they all show that people with good credit scores are more apt to be safer drivers. its a fact of life now that credit is used for most things....

Falcon163

maybe say i run up my credit score to like negative 300 lol i gotta pay a boat load for insurance where as to I got perfect credit and 30 tickets i agree it is not fair at all

Maricel S

Yeah, it's unfortunate that almost everything is dependent on credit scores nowadays. I don't see a correlation t all between someone with bad credit and someone who is a bad driver.

Scott H

Because "Studies" have shown people with poor credit statistically make more property insurance claims than those who have good credit. I don't think it's fair, either - but that's how it is.

gomanyes562

Credit scores demonstrate responsibility. Someone who is irresponsible is more likely to get into a crash.

girleyworley

The insurance company runs a credit report because the people who are financially able to pay their bills may not file a claim as quick as the person who can not pay there bills.

tarie75

I agree with you, why does my credit score matter. If I dont pay my bill I dont get insurance, plain and simple. I get it why dont they.

mbrcatz

Well, it's all about the numbers. REAL studies show that people with lower credit scores, on the whole, have more claims, and higher amounts paid out, than people with higher credit scores. I've seen the numbers - they are real. Just like 16 year old boys have more accidents than 35 year old women.

Nobody has done a "why" study of either credit scores, or 16 year old boys. The insurance companies don't CARE. All they care about is, well, the relationship is real, and it can be mathmatically proven.

No doubt, you only think it's unfair because it works against you. If you were 16, you'd think that getting higher rates based on your age was unfair. And if you were 80 and looking to buy life insurance, you'd think it was unfair that you were getting, well, the rates of a guy with one foot in the grave.

One thing I've learned - people only think rates are "fair" when they're in their favor.

UCANTCME

I AGREE WITH YOU AND I HAVE SEEN THIS WAY TO MANY TIMES BEFORE AND THE ONLY THING THAT I TELL MY CUSTOMERS IS TO CONTACT THE STATE BOARD OF INSURANCE AND SEE WHAT THEY CAN DO FOR YOU.

GOOD LUCK

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