Your Credit Score Can Affect Car Insurance Rates

Another trickle-down effect of America’s credit crisis: car insurance companies are using your credit score to help determine if you’ll be covered behind the wheel.

A Springfield insurance agent says car insurance rates have gone up about 5% in the past five years. Companies are really looking at those credit scores and using them to determine your rate.

You still have options if your score recently took a nosedive.

“It is very competitive,” Jeff Lindsey of Allstate says about the car insurance market.

He says companies can afford to be picky about who they insure.

“We take a picture of what you look like at a given time,” Lindsey says. “We’ll use everything from credit to loss history.”

That’s a double whammy for anyone who’s lost money lately, and it can affect your car insurance rate.

“Some companies could require you to have a certain credit score, some may rate you differently on price,” he says.

Lindsey says as long as you keep your insurance current, you’ll get a green light from insurance companies.

“Most companies don’t really look at that at renewal,” he says.

But if you miss a payment and let your insurance lapse, you’ll pay for it.

“You’re going to have a little bit of sticker-shock,” Lindsey says.

He says forget perks and benefits like company loyalty that save you money every year.

“You’re going to almost start over, so you may go back to an almost standard rate,” Lindsey says. “It’s going to be that way for at least a year.”

He says don’t be afraid to communicate with your insurance agent.

“Call us before you cancel and say, ‘Hey, I can’t make the payment.’” Lindsey says. “If you’ve been a client for awhile, there may be a skipped bill option.”

Insurance companies can’t forgive a missed bill, but they can look into policies that would give you a 30-day extension.

“We may be able to do some coverage options or things that could allow you some more time on your insurance bill without letting it lapse,” Lindsey says.

He says he did see clients miss payments in December and January, but since then, most clients can afford to make payments on time. Lindsey says that’s perhaps some “good news” on the money front, and we don’t get that a lot these days.

There is a state agency that oversees all insurance sold in Missouri. The Missouri Department of Insurance out of Jefferson City regulates insurance practices.

Companies file their rates with that agency for state approval. It’s also people’s go-to agency if you suspect an insurance company is gouging you with high rates. For more information, call 1-800-726-7390

Source: Ozarks First