When your credit score sustains a dent, make sure your car doesn’t. Because higher car insurance is just what you need when you’ve lost your job. Auto insurers use customers’ credit scores as part of the formula to determine premiums. Shop around—different companies assign different weights to credit score in their calculations. [MainStreet.com]

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  1. Trotsky says:

    This hit me, I am fighting some business credit issues (incurred when I was an employee for the a business, long story, not mine) and I must say, this is the biggest load of bullshit. Yes, your credit OBVIOUSLY has something to do with your driving ability and record, right?

    Credit reports are the biggest scam of the 21st century.

    • theblackdog says:

      @Trotsky: Perhaps if your credit sucks, you’re more likely to set your car on fire to collect [consumerist.com]

      • Jonbo298 says:

        @theblackdog: Credit could play a factor, but it shouldn’t be heavily weighed on premium cost. If you have a great history, you shouldn’t have your rates go up just because one company dinged you.

        Unfortunately, too many people think being a stupid criminal wins. Very rarely do they get away with it. We pay for the stupid.

      • WillG says:

        @theblackdog:
        And perhaps you will buy a winning lottery ticket, but I wouldn’t guess that it was any less likely.

      • ZukeZuke says:

        @theblackdog: Nice link! I was thinking the same thing…

        Sorry, but I can see some of the logic in their reasoning that the type of personality who keeps their finances in good order, is likely more attentive to other things as well, like driving. Though actual driving history should play a larger factor IMO.

        • theblackdog says:

          @ZukeZuke: I wholeheartedly agree that actual driving history should be a larger factor, unfortunately most companies do pull credit info.

          I’m with USAA, which is one of the best insurance companies out there, but even they say they will pull your credit info (unless prohibited by law) to help determine rates.

          • jpmoney says:

            @trixrabbit: This has nothing to do with paying in full or passing a credit check. It has to do with your premiums being more expensive because of a credit issue. The /.-er in me says rtfa.

            You know that drop in premiums you get when you hit 25? I had that for 6 months and it was great. They did a credit check and jacked my premiums back up to where they were before based on my credit history “not being long enough”. I have no claims on my record, have never missed a payment on an account and pay off my credit cards in full every month. My score hovers around 800 and I’m paying more because I’m young.

            Utter and complete crap.

            Its evil, and another way to “penalize” you for a system that you have no control over.

  2. wvFrugan says:

    Allstate is does this too. I recently got a “Privacy Notice” type letter stating that my credit report was being used as part of determining rates for my renewal. Never got one of these before & my agent was unaware of this going on until recently, but indicated a lot of her customers were pissed & asked to see my letter. My rates for home & auto have stayed the same (and my credit has its issues, mostly medical bills with my disability) and they can never cancel me per state law as I’ve been with them so long. THE INTERESTING THING THOUGH is that they worded the letter to make it sound like the state MANDATES that they use credit reports in setting premiums, which is not true. They twisted that the state mandates they tell you if they use your credit report, not that they do it! What disingenuous frauds they are.

  3. trixrabbit says:

    just pay up in full. no credit check required.

    • Laura Northrup says:

      @trixrabbit: What are you talking about? The credit check comes when you apply for insurance. And if you mean “pay up for your repairs in full,” don’t move to New York. Everyone has to have insurance here.

  4. chiieddy says:

    Illegal to use credit scores for auto insurance in MA.

  5. baquwards says:

    I can see pulling credit for a new customer, to kind of give some insight of risk, but from that point on, your driving record and payment history should be enough, they should not be able to pull it again just as an excuse to jack up your rates.

    I went through a bankruptcy and fully expected my insurance to skyrocket, but my insurance company hasn’t pulled credit in the 3 years that I have monitored my credit. I think that it would be unfair to jack up my rates because of my BK since I have never paid late, have brought my credit up over 700, never had a claim in the 10 years that I have been with them and have a completely clear driving record, but for a vast majority a BK is all they need for a rate jack.