There are many factors that affect the premium of car insurance. One of these factors is your credit information. How important is your credit information in determining your car insurance premium?

Most car insurance companies ask for credit information from you when determining the amount of premium for your car insurance policy. If you have a good credit history, you can almost assume that you will get a good car insurance coverage at a lower premium. It pays off to have a clean credit record.

Credit Behaviour Related To Claim Behaviour

Have you ever wondered why car insurance companies take into consideration your credit history in determining the premium for your car insurance policy? The reason is that most car insurance companies believe that your credit behaviour is related to your claim behaviour.

They believe that those people with a bad credit record are most likely to make a claim. It could be due to an assumption that they may be at debt because they have always something to spend on like car repair, medical or legal expenses. This means that they are risky so most likely they will be in the same situations again in the future. Another assumption is that because the person is already in debt, he may use the insurance claim to pay off the debt. He is prone to making false claims.

But this is not always the case, isn’t it? There are those who have a bad credit record for some reason but have already changed in terms of dealing with their debts. The car insurance company will also take this into consideration.

What If I Have A Bad Credit Record?

If you have a bad credit record, don’t worry too much about having too pay too high on car insurance premium. Credit history is not the sole determining factor in deciding on a premium. The car insurance company will take into consideration various other factors.

It is important that you maintain a good credit standing to ensure that when you have to apply for car insurance, you will get a better premium. A good credit standing is not just beneficial in car insurance application. Your credit standing will speak so much about you as a person.

Also be careful in submitting your personal information to the car insurance company. Make sure that you provide correct information. This is to ensure that the car insurance company will be able to track the right person’s credit history. Even if you have a good credit standing, if you spelled your name wrongly, the car insurance company might be able to find a bad credit history for that name. You will then be given a high premium out of this mistake.