When it comes to taking out personal car insurance cover, many insurance companies take into account your credit history. This is becoming standard practice more and more as the number of drivers who require financial protection continues to climb. If you are currently looking for a car insurance policy, then it is important to be aware of the fact that many will look into your credit history before providing you with a quote. This article will help to explain what role your credit history has in finding the right car insurance policy an how it can affect your premium rate.
When one considers the sheer number of people in need of car insurance, it is not difficult to see that a credit history check is a safety measure used to determine which policyholders they deem as high or low risk. They use this information in order to gain an insight into a driver’s behavior patterns to help them evaluate how often that driver might be expected to file a claim. In other words, from an insurance company’s perspective, policyholders that have a good credit history are less likely to file for expensive claims thereby reducing the potential for heavy financial losses. This means that if you yourself have a poor credit history, you will be considered to be a higher insurance risk and will more than likely be offered a higher premium rate.
Credit History Having said that, insurance companies also take a number of other factors into account when determine how much of a risk you are to insure. This can include your age, driving history, type of car you drive including its engine size, market value and security features, where you park your car at night and at times during the day at work, the safety of your neighborhood and how much mileage you cover in a year. If you have not accumulated any credit history yet, then you could also find yourself being offered a high premium rate compared to those who do. In these cases, it is prudent to search for car insurance companies that do not factor in your credit history when providing you with a potential car insurance quote.