Car Insurance Comparison

Similar to the way you use a price quote to make a quick car insurance comparison, insurance companies usually use a credit score to simply rate your credit. But unlike banks and other lenders, the scoring formula doesn't rate your income. Nor does it take into account your age, gender, marital status or where you live. And although there's no single formula used, common items looked at are, your record for paying bills, how long you've had credit, how many accounts you have, whether you've had a bankruptcy and what's the size of your overall debt.

It's estimated that over 90% of all car insurance companies use your credit to either set rates or decide whether to issue you a policy. They use your credit as a sign of responsibility because of studies of millions of customers. The results from the studies showed that drivers with poor credit made more frequent claims than drivers with good credit and the size of their claims was also larger. So unless you have at least average credit, you can't expect to get the lowest prices when you do a car insurance comparison.

After you make a car insurance comparison, how will you know if your credit affected the prices you got? The only way to be sure is ask the companies. If your credit is a problem they can tell you what the problem area is and what needs to be done to take care of it. And even if you know you have good credit, mistakes on credit reports are common, so it's a good idea to always ask.