If you’re looking for auto insurance, you might be surprised to find many insurance companies take into account your credit score when calculating the rate to charge you. This can be a big problem for people who have had trouble with their credit. Some companies even deny coverage entirely to people with bad credit history. Why do insurance companies even take into account credit score when calculating rates? What can you do if your credit scores less than perfect? Where can you find no credit check auto insurance to fit your budget? Even if you have bad credit or no credit, it’s still possible to get good quality auto insurance.
Why Do Insurance Companies Check Your Credit?
Insurance companies looking to your credit rating to determine your level of risk as a customer. They have found over time customers with lower credit scores have more accidents and file more claims. The rate of insurance fraud is also higher. Of course, that doesn’t mean that everybody with bad credit would do that, but the insurance company still charges higher rates for these people because of statistics. Remember, insurance companies charge people who they believe are larger risks more money in order to recoup their costs over time.
That means that one way to get lower rates is to show the insurance company that you are not a risk. If your credit numbers are low, one way to do that is by raising them. A rule of thumb is that credit score below 600 is bad no one above 700 is good. If your credit is poor, request a copy of your credit report to see what the problem is. In many cases, it is possible to raise your credit score in just a few months. In a year, you can see dramatic improvements that will result in lower premiums.
Options For No Credit Check Insurance
If for some reason you can’t raise your score, you still have options. Some companies still offer no credit check auto insurance. One option you have is to pay for insurance up front. Many companies won’t check your score if you’re paying beforehand. Another option is to look at local insurance companies in your area. These companies often cater to those drivers who can’t get insurance elsewhere because of problems like low credit score. Local insurance companies might be able to offer you a better rate as well since they know the area better. However, no credit check car insurance is usually more expensive than alternatives.
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