The Insurance Information Institute found that drivers with lower credit scores are statistically more likely than others to file large claims. This is why they pay more for auto insurance. California, Hawaii, Massachusetts, and Massachusetts allow insurance companies to use credit scores in determining the premium cost. Pennsylvania drivers’ credit scores can have an impact on how much insurance they pay each year.
Car insurance with poor credit is the best in Pennsylvania
Pennsylvania residents with poor credit pay on average $2,553 per year for car insurance. However, the national average of drivers with good credit is $1.674, which is an $879 difference.
Although it may seem technical, your premium will not rise due to your credit score. It is your credit-based score. Both are nearly identical as they are both derived from credit reports. These are created by the Big Three — TransUnion, Experian, and Equifax. Your credit score can be calculated by VantageScore, Fico or Experian. However, your insurance score will be determined by LexisNexis and Fico.
However, credit-based insurance scores are determined using information such as the amount of debt, missed payments, and types of credit.
You can be classified as:
- Poor
- Average
- Good
- Excellent
Your credit score will not affect your premium. However, it won’t cause you to lose coverage. Your premium will go up, but insurance companies will not deny you coverage.
What does my credit have to do with my Pennsylvania car insurance rates?
Numerous studies have demonstrated a correlation between credit scores, claims amount and credit score. Higher credit scores are associated with higher claims. This statistic is reviewed every ten years or so and a new batch are done. The mid 2000s was the most recent batch.
The Texas Department of Insurance published a major study in 2004 that confirmed previous research. The FTC also did the same thing and came to the exact same conclusion. It is not clear why. They could only say that there was a connection. According to some studies, drivers with low credit scores posed a greater risk of financial ruin for insurance companies than those with higher credit ratings.
This is the flip side of all this: your premium will drop if your credit score increases. There is one catch: you might have to wait. Your auto-policy will not renew after six months because insurance companies typically write 6-month policies. Most insurance companies don’t review information until they are ready to issue a new policy. Many drivers choose to switch insurance companies. The new insurance company will calculate a premium based on your most recent information, such as credit scores.
What are other factors that impact auto insurance rates for Pennsylvania?
Your credit score is not the only factor that will determine how much you pay for insurance coverage. The real cost comes down to these three variables:
- Metro or state — Some zip codes are more dangerous than others for drivers. It doesn’t matter what the risk is. You can have your car damaged by theft, vandalism or other drivers. No matter how it happens drivers who live in high-risk areas pay more for their car insurance. Florida drivers moving from Tampa to Orlando can save approximately $450 per year.
- Driving record — If you’re a high-risk driver due to your driving record, you will pay more than your peers. Insurance companies will be more likely to file more claims if you have multiple speeding tickets and at-fault injuries. A DUI is the worst. In Pennsylvania , the average rate of increase following a DUI is 109%.
- Car — Expensive cars drive up premiums, too. Driving a mid-range vehicle that has a high safety rating is the best thing you can do. One prime example is the BMW 330i vs. the Honda Odyssey. Insured BMWs cost an average of $2225 while Hondas are $1,454 per year.
How to get Pennsylvania car insurance at a low price with bad credit
There are many things you can do right away to reduce your insurance costs. These include:
- Your monthly bill will be lower if you increase your deductible. However, if you are involved in an accident, you will need to pay more out of your pocket. Talk to an agent about the best deductible that suits your needs and budget.
- You should shop around to find the best auto insurance for poor credit in Pennsylvania. Although every insurance company considers the same information when calculating premiums, each company has their own pricing algorithm. It is possible to obtain a lower premium simply by switching providers, as every company values and penalizes certain things.
- Comparing discounts: A good way to find cheap car insurance in Pennsylvania for people with bad credit is to comparison discounts. Although many companies offer similar discounts, the savings you’ll get may vary greatly from one company to another. When shopping for car insurance, make sure you compare the discounts that you can use immediately and those that you can use later.
FAQ
When I apply for insurance, will I be subject to a credit check?
You will. However, it won’t affect your credit score as you aren’t applying for a loan. Soft credit checks are those that aren’t used to finance any type of loan or line of credit. It is called a “hard credit check” if you are.
Is Pennsylvania available for bad credit auto insurance?
Both yes and no. In Pennsylvania, there is no such thing as car insurance for people with poor credit. While some insurance companies may be more accommodating to low credit scores than others, there aren’t any companies that only work with drivers with poor credit. Your credit score may not be the reason your premium is rising. You should shop around for the best rate.