Your Auto Insurance Score Counts

Insurance scores and your rates.
Your insurance score is a number that auto insurance companies use in evaluating what your premium should be. Generally it’s based on your driving record, personal information, and your credit report. The companies take information from these categories and apply sophisticated algorithms and statistics to derive individual  scores. Most companies will not release your insurance score to you as it is viewed as proprietary information, but it never hurts to ask if you are curious.

Your credit report is a big factor.
Insurance companies use credit reports in helping to determine your insurance score because it has been shown statistically to be a very good predictor of your individual risk. Statistically, there is a correlation between your financial payment history and how likely you are to be in an accident or file a claim. This doesn’t mean that your credit score is the same as your insurance score. You could have a very good record in terms of financial payment history and still have a bad driving record. However, good driving and good credit do have a strong correlation.

Insurance scoring is actually a good thing because it allows the insurance companies to base the rates of all drivers more accurately. This allows insurance providers to more accurately predict costs in terms of claims, and better predictability helps keep auto insurance rates lower for us all.

Insurance companies use your credit report as a predictor of how responsible a person you are. They don’t care how much money you make or what you are borrowing for. What they are interested in is how good you are at paying your bills and if you take your financial status seriously. As both above-average scores and below-average scores factor into the overall credit scoring and are considered in the equation, you will still have the opportunity to get a lower premium even if your credit history contains some issues. Some of the factors that carrier companies look at in your credit record include: 

 - A longer, well-established credit history
 - A strong payment history with multiple creditors
 - A number of different, open accounts in good standing
 - Very few or no late payments or accounts that are past due
 - Relatively low use of available credit

On the other hand, some factors that could work against you in your credit report include:

 - Accounts that are in “collections”
 - Poor payment history
 - A pattern of past-due payments
 - Higher use of credit
 - A large number of recent credit applications

Improving your insurance score.
Unfortunately, you can’t improve your score overnight. Improving a less than stellar driving record or a poor credit history takes time. Some factors are out of your control – such as having a short credit history. There are things you can do right now that will begin improving it, however. These include keeping accounts up to date, making mortgage and car payments on time, and avoiding making multiple credit applications over the space of a few months. In terms of driving… avoiding moving violations is key. And modifying driving habits can help avoid accidents, which are very hard on your score.

The only way to make sure you get the cheapest online auto insurance is to comparison shop. Fill out the simple form on QualityAutoInsurance.com, and get instant, online auto insurance quotes from the nations top carriers.