Did you know your credit score can affect your insurance ratesl Some insurance companies give a huge amount of weight to your credit rating to help set car insurance premiums. Other companies may deny you insurance altogether if your credit rating is very bad.

How Your Credit Scores can Affect Your Insurance Rates

There are benefits to having your credit affect your car insurance. Over 50% of all policy holders have lower premiums because their credit score is better than average.

Why Do Car Insurance Companies Use Credit Scores?

Insurance companies are always looking for ways to lower their risks. Statistics have shown them that people with bad credit ratings tend to have a higher rate of accidents. Good credit risks, on the other hand, seem to be more responsible drivers. The bottom line? The better your credit score, the stronger the possibility that you'll get a lower insurance premium.

Banks and other financial institutions have long used credit information on individuals to gauge whether or not to grant them more credit. Now insurance companies are in on the act, too. A higher credit score tells them an individual is a more conscientious person who will not only pay their insurance bill on time, but will also likely be a better driver.

The insurance companies have done their homework. The average cost of a claim for a person with below average credit is $918, For a person with above average credit, it's $558. That's a 23% difference, one the insurance companies are not about to overlook.

How Car Insurance Companies Use Your Credit History

Insurance regulations are set at the state level so factors that insurance companies are allowed to use are regulated there. And many states allow credit reporting to as usable factor in setting premiums.

The bottom line is this, your credit scores can affect your insurance rates. The better your credit score, the better your rates will be in most states. By using InsWeb's online questionnaire, you can quickly and conveniently compare multiple insurance quotes from multiple carriers and choose which one works best for you.