Insurance companies use credit score to set car insurance premiums. This is because data that indicates a person’s ability manage financial affairs can often be a good indicator as to whether or not they will generate more or less insurance claims. This assumed risk is addressed by carriers who adjust their premiums.
When applying for auto insurance, most drivers will be asked about their credit history. The practice is allowed in all states, except California, Hawaii, and Massachusetts.
Bad credit is not a problem for Georgia’s best car insurance
A Georgia driver with bad credit scores will pay $1,469 less per year for full coverage than a national driver with good credit.
Each insurance company uses a different classification system to classify drivers according to their credit score. The “Big Three” credit rating agencies Equifax Experian, Transunion and Equifax use a slightly different classification system. They have five tiers, from poor to exceptional, for scores between 300 and 850.
This is partly due to the fact that insurance credit scores and financial credit scores are used for different purposes . Standard credit scores are used by banks and lenders to predict the likelihood of a borrower defaulting on a loan. The insurance scores are used to predict insurance losses.
What does my credit have to do with my Georgia car insurance rates?
Lenders look at credit scores to determine the likelihood that a borrower will default or be late on a loan. Insurers review a variant of the financial credit score to determine if a potential insured is responsible and less likely to have any accidents.
Georgia law allows car insurance companies to examine credit scores to determine risk and adjust premiums accordingly. Credit scores can be used to quickly assess key risk factors such as outstanding debt, credit history length, credit mix, payment history, and excessive credit search. Each car insurance company evaluates credit scores in a different way It is important to compare multiple quotes and research different car insurance companies.
It is possible to find a new carrier if your current carrier refuses to adjust your premiums for credit scores that have improved. Switching providers should not be taken lightly. You wouldn’t want to change your carrier during a claim. Ask different companies about their credit policies and be open with them about your desire to get better rates for you. After you receive quotes, go back to your carrier for a final look.
What are other factors that impact Georgia’s auto insurance rates?
Car insurance premiums can be affected by credit scores, but not as significantly as other factors. In Georgia, for example, there are many factors that can have a significant effect on auto insurance rates.
- Speeding ticket – In Georgia, this will raise your annual premium by $465
- Involved in an Accident – Your annual Georgia insurance rate will rise by $957
- Coverage gaps – In Georgia, you will notice a $279 increase in your annual premiums.
- DUI conviction – In Georgia, this is a serious offense that will result in your annual premium increasing by $1,709.
The resulting premium rise in Georgia for each of these four events is greater than the average national premium hike for the same event.
How to get Georgia car insurance at a low price with bad credit
It can be demoralizing to learn that your credit score has affected your car insurance premiums. However, there are steps you can take to get affordable coverage in these situations.
- Do your research and compare the rates of several auto insurance that are known to work with drivers with bad credit.
- To improve credit, there are many steps you can take right away. These include setting up automatic bills payments and taking out short-term loans to repay quickly.
FAQ
When I apply for insurance, will I be subject to a credit check?
Soft pull is the term used to describe credit reviews by insurance companies. This means that your credit review won’t be viewed as a “hard pull credit check” like those done by a lender. This will not have any negative effect on your credit score.
Are all car insurance companies able to check your credit score?
Today, car insurance companies will check credit to assess drivers’ insurability risk. Some companies that don’t may increase your premiums in order to cover the possibility of not knowing your credit score.
If I have bad credit, what is the best car insurance policy?
There is no one insurer that will work best for all people with bad credit. Other factors such as driving record or coverage lapses can also play a significant role. Compare quotes from several well-respected companies that deal with credit problems coverage.