Why do car insurance companies check your credit score?

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In a nutshell...
  • Some reports estimated that over 30 percent of all credit reports have errors
  • Outside agencies proved that consumers with low credit scores have a higher chance of filing a future claim
  • There are other variables which may provide many discounts where your final car insurance premiums

Car insurance companies commission thousands of studies per year to measure risk across a long list of variables.

In fact, actuary jobs are some of the highest paying jobs for students majoring in math fresh out college.

An average salary for an actuary can hit $100,000 in some states, and over 75 percent of all actuary jobs are in the insurance industry.

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What is a credit score?

Nothing specifically about your driving skills or how you can swerve faster than a speeding bullet but the odds of you filing a future claim.

Studies commissioned by both car insurance companies and outside agencies prove that consumers with low credit scores have a higher chance of filing a future claim and logically this makes a little sense.

When the going is good, and you have sufficient confidence, then you may not file a small claim to avoid risking higher future auto insurance rates with an application on your record.

Again, it’s not a personal definition of you as an individual but the result of risk studies for groups of people with bad credit.

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*based on a survey of 1,000 car insurance customers

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How much will a poor credit score cost me?

There is no black and white answer for this as some car insurance companies pay less attention to credit scores than others.

Then there are other variables which may provide many discounts where your final car insurance premiums will not seem affected at all.

Some reports estimated that over 30 percent of all credit reports have errors so before you start car insurance comparison search try to pull a copy of your credit report and credit score and dispute any information you believe to be incorrect.

Instead of comparing only a couple of companies try to compare at least a half dozen or more and maybe even look for companies who do not pull your credit.

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