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Bad Credit Score Can Make Your Premiums Double

Drivers with poor credit pay twice as much — 91 percent more on average — than those with excellent credit scores, according to InsuranceQuotes.com. Those with average credit pay 24 percent more. Read more and use our website to get auto insurance quotes online free.

car-insurance-1Of course, credit is just one of lots of factors that define your auto insurance rates. Where you live, the car you drive, your driving record, age and gender all affect your rates too. But when you hold those other factors constant, a bad credit score delivers a thump in most states, according to research commissioned by InsuranceQuotes.com. (Three states — Hawaii, California and Massachusetts — bar insurers from considering credit scores in setting auto insurance premiums.)

InsuranceQuotes.com commissioned Quadrant Information Systems to examine the effect of credit scores on average rates using data from six large carriers in all 50 states. Since three states don’t use credit as a factor, those states actually pull down the average rate hike you’d suffer by having bad credit. When those states are excluded the average cost of a bad credit score is 116 percent, according to a spokesman for InsuranceQuotes.com.

Why would your credit score have such a huge impact on your auto insurance rates? That’s not entirely clear. Perhaps people who have bad credit are so worried about money that they drive erratically — or maybe they’re unable to handle the smaller claims that another driver might pay out of pocket. Or, there’s a chance that if you’re meticulous about your credit, you’re also meticulous about your car, making certain to keep it secured in a locked garage, where it’s less vulnerable to break-ins. All insurance companies know for sure is that bad credit statistically leads to a higher incidence of claims. More claims lead to higher rates.

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