Why Your Credit Score Affects Auto Insurance and How to Improve It

In many states, insurers use your credit score as one factor when determining rates.

The basic idea is simple. Drivers with stronger credit histories tend to file fewer claims, so they often qualify for better rates. That means a better credit score can lead to a lower premium.

How Credit Impacts Your Rate

Your credit score isn’t the only thing insurers look at. Your driving record, vehicle, location, and claims history all play a role. But credit can still make a noticeable difference in what you pay.

The good news is your credit score isn’t permanent. With a few good habits, it can improve over time, and that may help lower your insurance costs.

Three Simple Steps That Can Help

1. Pay your bills on time

Payment history is one of the biggest factors in your credit score.

2. Keep credit card balances low

Many experts recommend using less than 30 percent of your available credit.

3. Check your credit report for errors

Mistakes happen, and correcting them can sometimes give your score a quick boost.

Review Your Coverage

If your credit score has improved, it may be a good time to review your auto insurance policy. You could qualify for a better rate or new discounts.

At Dehmer Insurance, we help drivers understand what affects their insurance rates and find coverage that fits their needs.

Steele Dehmer of Gluckstadt is the agency owner at Dehmer Insurance Agency in Madison, Mississippi.