Aside from moving violations and drunk driving convictions, there are other factors that determine how much you pay for auto insurance. Such factors include your age, gender, driving experience, where you live, how many miles you drive, what kind of car you drive and your credit. “What does my credit have to do with my auto insurance?”
Your credit score tells lenders how creditworthy you are, how likely you are to pay back a loan, and whether you’ll pay your bills on time. You expect credit card companies and lending institutions to check your credit when you apply for a card or loan, but did you know that your insurance company is going to be interested in running your credit too? Did you know that a clean driving record can’t protect you from high premiums if you have poor credit?
According to Consumer Reports, “The increase in your premium can be significant. Our single drivers who had merely good scores paid $68 to $526 more per year, on average, than similar drivers with the best scores, depending on the state they called home.”
“And your credit score could have more of an impact on your premium price than any other factor,” says Consumer Reports. So, the question is, does South Carolina insurers use credit scores to determine insurance rates? Yes, it does. The only states that prohibit insurers from using credit scores to determine prices are California, Hawaii, and Massachusetts.
Why Does Your Credit Matter?
Why do insurance companies use FICO scores to set premiums? Because, they believe the lower the driver’s credit score, the higher chances of them filing a claim. “Nationwide uses a credit-based insurance score when determining premiums,” according to nationwide.com. Nationwide continues, “In fact, 92% of all insurers now consider credit when calculating auto insurance premiums.”
Related: What Determines Auto Insurance Rates?
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