Credit scores affect car insurance - KATV - Breaking News, Weather and Razorback Sports

Credit scores affect car insurance

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You are probably aware that bad credit scores can make you have higher interest rates.  However, most people are unaware that their spending habits can cause their vehicle insurance to skyrocket.  A new report shows your insurance could be almost as much as double the amount someone with excellent credit pays.

InsuranceQuotes.com looked at data from six large insurance companies across the United States.  It found drivers with poor credit pay as much as 91% more than people with top scores.  Likewise, they also paid 24% more than people with median credit scores.

While insurance companies aren't clear on why bad credit and high insurance premiums are so closely related, they do know that bad credit statistically leads to a higher incidence of claims, which leads to higher rates.

Like credit scores, the insurance score is based on reports from credit bureaus and still takes into account things like late payments, outstanding debt, bankruptcies and new applications for credit.

Basing car insurance rates off of credit scores is a controversial practice. Opponents say credit-based insurance rates are unfair because they largely and negatively affect low-income drivers. However, supporters say the scores benefit those with good credit.

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