There are many factors insurance companies use to determine your auto insurance premium, and, in most states, your credit score is one of them. Your credit-based insurance score is not the same as your credit rating used by lenders when you apply for a credit card or loan. Insurers look at your money management history to determine your insurance risk, like if you pay your bills on time and if you have been in collections or filed bankruptcy before.
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If you have a limited credit history or bad credit, you could pay higher insurance premiums than someone with excellent credit.
Why do insurance companies care about my credit score?
Insurance companies base premiums and their decision to offer you insurance coverage on how risky you are to insure. People with negative money patterns—and usually a poor credit score—are considered a riskier person to insure, so the insurance company may offer coverage at a higher rate than a less risky individual. Insurance companies use specific parts of your credit report to create your credit-based insurance score, including:
Credit history length
Collections
Bankruptcies
New credit applications
Outstanding debt
Late payments
Some states do not allow credit to be used as a factor when determining car insurance premiums. California, Hawaii, Michigan, Massachusetts and Washington do not permit insurance companies to factor in your credit score when determining your insurance...
Read Full Story: https://www.bankrate.com/insurance/car/no-credit-history/
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