Did you know that your car insurance premiums may be affected by your credit score? Well, they can, and more and more automobile insurance companies are turning to this new system of premium determination. Not all companies are using this new system but many are, and if your company is using it, you should know a few things.
There is a philosophy behind this system. Some consumers may not agree with it, but there is one. After years of data collection, research, and study some car insurance companies have concluded that those individuals who have low credit scores are also the individuals who file the most claims. This assertion leads to some interesting questions, the most notable being: Do people with lower credit scores drive more poorly than those with higher scores?
The answer to that question is debatable. It might very well be that car insurance companies receive more claims from lower credit score individuals for reasons that have nothing to do with accidents. It is entirely possible that these same people live in communities where auto theft or vandalism is more prevalent than in other communities. There is also some debate over fraudulent claims, which...
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