From filling up the gas tank each week to keeping the vehicle well maintained, the cost of owning a car can add up quickly, putting a major strain on your finances.
Then there's auto insurance. A number of people do not factor in this coverage when they're considering purchasing a car — and it's an oversight that can cause significant financial problems. Although car insurance can be a costly expense, learning the factors, like good credit, that influence the price of your premiums may enable you to spend less money on it each month.
Your age, driving history and vehicle type are all factors that affect your auto insurance premiums. While these components can be difficult to change — 18-year-olds will likely have to deal with higher coverage costs for years, whether they like it or not — one factor that influences premium rates, and which a person may be more capable of changing, is a credit score. That's why learning how a good credit score may result in lower insurance costs for you may be the push you need to get your finances in order.
Credit Scores and Premiums
Similar to a landlord or lender, an insurance company considers your credit score as a reflection of risk; the more responsible you are with your finances, the more responsible you will probably be while you're driving. Thus, if you have a good credit score, you will likely qualify for the least expensive premiums on your car insurance because the provider thinks that you will get into fewer accidents.
It is important to note that not all states allow insurance companies to use credit reports and scores as a determinant for premiums. There are currently four states that do not allow these components to be factored into insurance costs: California, Hawaii, Maryland and Massachusetts.
Also, if you have improved your credit scores or gone an extended period of time without getting into an accident, you may benefit from calling your insurance provider and trying to negotiate down their premiums. If this strategy is unsuccessful, you may want to begin searching for other insurance companies that will factor in good credit reports and scores into their interest rates.