As we all aware of the fact that the personal history of a person is one of the significant factors while deciding car insurance premiums. Of course, it is correct but there is another factor that contributes to thepremium of car insurance that is The Credit Score.
What do you mean by credit score?
Simply put, it is a three-digit number that indicates the creditworthiness of an individual based on the previous history of credit. In other words, it is the likelihood of a person for paying loan amounts.
Here are some of the highlighted factors that are being used by car insurance companies to analyze the credit score of a person. Let us have a look at these below.
- The complete history of credit.
- Payment history of an individual along with the engenders to delay any amount of payment.
- Types of credit cards that are being used by the company such as a credit card or debt and others.
- There is a deep relation between the credit score and car insurance, that is why these companies use the credit score as a factor to decide the car insurance premium.
Let us know more about the link between credit score and car insurance below.
Relationship between credit score and the car insurance policy
The basic premium provided by the car insurance agency decides based onthe insurance score of that particular car. Now, the insurance score is the rating of an individual by the insurers indicating that the prospects of claims for various car models.
It has also observed in some of the studies that there is a strong relationship between car accidents and the credit score of the person. Therefore, the insurance score depends on thepolicyholder’s history of credit defines that the claim possibility of insurance for road accidents.
It is also advisable that a policyholder can claim car insurance after meeting with an accident if they have a good or high credit score maintained. Further, the person with a good credit score is more likely to get the maximum benefits of a car insurance policy. This is the reason why the insurer always advised to maintain a better credit score and claimto fill easily.
What is the clout of credit score on car insurance?
There is an adverse influence as if the credit score is high, then the car insurance premium will be low.A high credit score will help the person to get eligible for more advanced benefits and other features on the car insurance policy.However, it becomes difficult to file a claim if the credit score is low.
There is no role of age, gender and income in deciding the credit score. Simply, it represents the capability of a person to be punctual while paying their debts. You can improve the credit score by paying bills timely, keeping with a low balance in credit card and clearing debts on time.