Auto Insurance Credit Checks
Posted by: info | July 22, 2007
Do you know that most insurance companies check credit history before providing quotes? How does this affect credit scores? When an auto insurance company checks your credit report they are looking at your history to help determine rates. Bad credit reports can increase the price a driver pays for auto insurance. Here’s why.
Auto insurance companies have determined that a driver with a bad credit score or history is more likely to file a claim, including fraudulent or bogus claims. Also their research has showed that a driver with bad credit is less likely to pay their policy on time or complete the terms. This could cost insurance companies thousands of dollars each year. However, they are able to recoup a lot of their money from unfortunate drivers who pay more for auto insurance due to bad credit and pay their policy according to the terms and pay it on time.
A credit check from an auto insurance company will remain on your credit report as a credit inquiry for 2 years. However, this inquiry will not have an impact or lower your credit score. This is different from other credit inquiries that financial lenders look at to determine your overall credit worthiness. Inquiries from lenders when applying for cash, home and auto loans do impact your credit score and report.
Posted in: Insurance, General |
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