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Besides being a careful driver, getting affordable car insurance now requires that you're also careful with your finances. It's estimated that over 90% of all car insurance companies use your credit in setting rates or deciding if to issue you a policy. So if you want affordable car insurance, you'll need to have average to good credit.
The connection between your credit and the insurance rates you pay was found after the records of millions of policyholders were checked. The records showed that if you had good credit, you usually filed fewer and smaller claims than if you had poor credit. And since you're less of a risk to insurance companies if you have good credit, you can get more affordable car insurance.
Unlike the traditional ways to set rates, insurance companies don't consider your age, sex, marital status or where you live when judging your credit. Which means that a 21 year old single man with good credit can have a better chance of getting affordable car insurance, than a married woman of 40 with poor credit.
Car insurance companies typically used a credit-scoring formula to rate your credit. The formula will vary with the company, but usually they rate the same items. And if you want affordable car insurance, you'll need to rate well for these. The items include such things as your bill-paying record, how many accounts you have, you total debt, how long you've had credit and if you've had a serious problem like a foreclosure or bankruptcy.
To find out if and how your credit is affecting your rates you can ask your agent.
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