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Do Credit Scores Affect Car Insurance Rates?

Blue toy car on a credit score document - Cheap car insurance in Georgia

Do car insurance companies check your credit score before setting your payment rate? Do credit scores affect car insurance rates? Yes, they do. Unfortunately for some, premiums for coverage in Georgia can be based, at least partly, on how well you’ve handled your finances in the past, based on your score. 

A low credit score can feel impossible, especially when it affects something as essential as car insurance. That said, it’s important to remember that your score isn’t the only factor that goes into your premium. Insurers always consider other aspects, like driving history, when calculating your rates. Some insurers also offer programs to help people with lower scores. 

A low score can be a problem, no doubt about it. But don’t stress out if your finances are a little shaky right now. Read on to learn more about how credit score affects car insurance rates and solutions that can help you earn more affordable premiums. 

The Surprising Link Between Your Finances and the Road 

You might already know that those with financial troubles often pay more when it comes to buying certain high-price items, including new and even used cars. That’s because those with bad scores pay higher interest rates for car loans than those with better credit. 

It works in a similar way when you get coverage for that vehicle in Georgia. If you are financially challenged due to emergency medical costs, long-term unemployment, or any other reason over which you don’t have much control, you’ll very likely have to pay more to insure that vehicle. That’s one of the secrets behind why your car insurance in Georgia is so expensive. 

Is it fair? Maybe not, especially if your score is low due to unexpected and unavoidable expenses or job loss. But it’s not a matter of fairness; it’s all about risk assessment. 

What Your Credit Score Tells Insurance Companies 

Know what makes the people who determine your rate at the car insurance company nervous? Policyholders with a history of being reckless behind the wheel, or with their finances. That’s because reckless people tend to do things without considering the consequences beforehand. When behind the wheel of a car, they might drive above the speed limit, change lanes suddenly and without signaling, drink and drive, refuse to wear seatbelts, or experience road rage. And the list goes on. 

Some reckless people are also irresponsible with their finances. They might rack up high credit card bills, spend their money on unnecessary things, and fail to hold down jobs, which might be why they have poor scores. See the connection between auto insurance and credit score insurance from the insurer’s point of view? 

Of course, that point of view isn’t always accurate. Even highly responsible and hard-working people like you can run into financial troubles for which they can’t be blamed. The national economy tanks, and they lose their jobs as a result. They could have a seriously ill family member whose treatment costs thousands of dollars and must be paid out of pocket. Whatever the cause, even responsible people can still end up with serious money problems that damage their credit. It happens all the time. 

Despite these very understandable reasons for a low credit score, in Georgia, insurers can consider your score, among other factors, when determining what you’ll pay for your auto coverage. 

Man smiling in his car with good credit score - Cheap car insurance in Georgia

The Consequences of Poor Credit on Your Wallet 

Sure, you might pay more for coverage if you’ve had some recent financial setbacks, but it can’t add up to that much — can it? 

Unfortunately, it can. One estimate is that Georgia drivers with poor credit pay an average of about 68% more for their coverage than those with good scores. That’s a big difference over time. Once again, those who can least afford to pay more … pay more. 

If there’s any good news on that front, it’s that those high rates don’t necessarily last forever. You can eventually bring the cost down by bringing your scores up. 

Improving Your Credit Score for Better Insurance Rates 

There are many reasons to try to improve your score. It will enable you to pay less for car loans, get a home mortgage, and earn lower interest rates on credit cards. Among a multitude of benefits, you’ll likely also find that your auto coverage is much more affordable. 

Spending less, saving more, and paying down your card balance on time are excellent ways to boost your score. Finding a higher-paying job or taking on a second job for a while can increase your family’s income so you can go about reducing your debt load. 

As your debts shrink, you’ll see your credit scores rise. It will take time, patience, and perseverance, but saving money and budgeting can do wonders for your finances — and, ultimately, what you pay for your coverage. This is one of the unexpected ways to save on car insurance in Georgia. 

Navigating Car Insurance with a Low Credit Score 

All is not lost, even if you have a low score. There are some car insurance tips you can rely on to get more affordable car insurance. There are other factors affecting your premium that you may be able to control. If, for instance, you have a good driver’s record, that can go far in offsetting the impact of your credit score. After all, insurers know that responsible drivers are at a much lower risk of causing an at-fault auto accident. 

You should also know that certain makes and models cost less to insure than others. Pricier vehicles, for instance, generally cost more for coverage because they’d cost the company more to repair or replace them. Some cars are more frequently stolen, and replacement parts for others might be hard to get and, therefore, pricier. All of that is reflected in the premiums you pay. But if you stay away from those “problem” vehicles when car shopping, your premiums will likely be lower. 

And finally, there might be a few companies that don’t even rely on credit scores to determine the premiums they charge. But which companies will ignore your credit score? How are you expected to know? You’re not an expert. Don’t worry about it. You don’t have to be alone in figuring out how to contain your insurance costs. Simply discuss your best options with a knowledgeable auto insurance agent who can steer you (pun intended) in the right direction before you buy your next car or seek cheaper rates for the one you already have. 

For even better results, speak with an independent auto insurance agent. Independent agents don’t work for any single insurance company. Instead, they’ve contracted with multiple carriers, so they can shop for coverage from the most affordable lines on your behalf. This will even further offset the higher cost you might have to pay if you have poor credit scores. Or your agent will find you an insurer that doesn’t care about your credit. 

Once you and your independent insurance agent have found the cheapest possible coverage, ask your agent to review your options, as your credit report shows improved scores. Chances are very good that your premiums will go down over time. 

Getting Full Coverage on Auto Insurance 

Do car insurance companies check your credit report in the state of Georgia? Yes, a lot of them do. There is a definite relationship between auto coverage and your credit report, and it can hurt you financially in the short term. But that doesn’t mean you have to be held to unaffordable rates on the coverage you need. Not if you first consult an independent and knowledgeable auto coverage agent before you buy another car or consider switching policies for one you already own. 

Simply call Southern Harvest Insurance at (877) 831-4677 and talk to us. Or get a quick quote online. You can also find a nearby Southern Harvest Insurance office wherever you live in the Peach State. We invite you to schedule a meeting with one of our savvy, independent auto insurance agents.