What do obeying traffic tickets and paying your Credit cards on time have in common? Ironically, they can both help keep your auto insurance rates down. Most people know how important credit scores are and how it can impact them when buying a new home, a car, or taking out a loan. But what most drivers are not aware of is that they also help determine what insurance rates you will be paying on your vehicle.

Credit Scores Count

It would be great to think that just by keeping a good driving record you were all set to get a discount on your insurance premiums. And it may be true that you get one, but if you aren’t also cautious about protecting your credit, you may be paying more. And it is estimated 92 percent of insurance companies do look at a person’s credit when determining the premiums they will be charged.

Insurance companies look at your credit because they realize that a driving record may not tell the whole story. It is somewhat easy these days for people to get things like tickets removed from their driving record, or for a speeding ticket to be downgraded. So insurance providers may feel that it’s not an accurate picture of the type of risk a driver really poses.

What it Shows

Insurers can use the credit reports to view your payment history, how long you have had a history of credit, and what type of credit you have. If they see you are not paying your bills on time and are financially delinquent, they may feel you will be the same way with them, and in turn raise your rates.

On the other hand, if you have a good credit report they usually give you a discount on your rate. In order to make sure your credit is getting you a discount rather than a higher rate, it is important to always know what your score is and work to improve it. You can raise it by paying your bills on time, not having more credit that you need, and not having too many outstanding loans at one time. If you see your report has errors, work with the reporting agency to get them cleared from your record.

Shop Around

If you know that your score is not all that favorable you should work to improve it as much as you can. It also doesn’t hurt to get some quotes from other insurance providers. Maybe you will be lucky enough to find one of those insurers that fall in the eight percent that don’t look at your credit in helping to determine your rates.

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