When it comes to getting car insurance, there are numerous factors that can determine the premiums that you pay. One of those factors is your credit score. It may have a considerable impact on what you will pay for your car insurance depending on the report.
In order to calculate your premiums, auto insurance companies use a number of statistics to assess the risk in insuring your vehicle. One of the more controversial stats used in their calculation is credit score which may raise or lower the amount you pay on your premiums.
Table of Content
- What is a Credit Check?
- What is a Good Credit Score?
- How to Analyze Your Credit Report?
- Tips to Improve Your Credit Score
- How to Demonstrate Your Low Risk Status?
- Auto Insurance Companies that Don’t Check Credit
- States that Don’t Let Insurance Companies Use Credit Score to Determine the Premium
- What to Look for in No Credit Check Car Insurance?
- The Bottom Line:
What is a Credit Check?
A credit check is performed by insurance companies because it is a factor in how a person will pay for their insurance as well as a statistic for their chances of being in an accident.
Depending on the person’s credit score, they may have considerably difficult getting a low, affordable auto insurance. Such people are seen as a substantial risk to not fully paying on the policy.
Fact: Poor Credit Scorers are Considered as Risky Drivers.
However, there is also statistical evidence that people with poor credit scores are also a greater risk in terms of accidents on the road. Therefore, it is not surprising that many people are looking for affordable car insurance and no credit check.
So, before you start looking for car insurance, it is best if you first look at your own credit score to see if it may be low enough to cause higher insurance rates.
What is a Good Credit Score?
Generally speaking, a good credit score for most insurance companies is around 650. Of course, your rate may vary depending on some additional factors which include your history with the insurance company in making timely payments.
Those who enjoy a credit score higher than 650 will see their rates decreasing as it goes up.
If you score is well below of 650?
650 is the break-over number because the lower your score is, the higher your premiums will be. In fact, a terrible credit score may send your insurance premiums skyrocketing again depending on your history with the insurance company.
How to Analyze Your Credit Report?
The good news is that you can get a credit report from free sources. They will provide not only the score, but also the reasons why it is ranked the way that it is. This means that before you set out to get car insurance with no credit check you should first look at your credit score and see if it is going to be a real problem.
The good news is that credit scores do not have the same impact as they would on getting a loan or mortgage.
For example the insurance can be dropped the moment you stop paying. This is unlike a loan where the money is already in your hands and you are trusted to pay off the debt. However, if you really have a bad credit score then it will affect the rates you pay for car insurance.
While it is rare that you would be rejected strictly on the grounds of your credit score, you may wind up having to pay a far higher amount than you desire.
Tips to Improve Your Credit Score
There are a number of ways that you can improve your credit score and the best way to start is looking over your credit report.
- Pay off old debt
- Remove information that no longer is valid
- Start building good credit through paying off loans and bills
It may take time to improve your credit score, but approaching each issue one at a time will start lifting the number upwards. You should take opportunities to build new credit as this will help boost your score as well.
However, you are still not obliged in getting no credit check car insurance as there are factors that can improve your status with insurance companies.
How to Demonstrate Your Low Risk Status?
Remember that your credit score is one of many different factors, so when presenting yourself to insurance companies you’ll want to demonstrate the following;
- Both you and your spouse driving record
- Paying insurance on time
- Improvements in your credit record
- Driving a lower risk vehicle
Each of these factors plays an important role in getting you the best premiums for your insurance policy.
A good driving record and paying your insurance on time are two potent reasons why insurance companies may reduce your premiums.
However, you may find yourself facing no credit check auto insurance as your best option. Click here to get quotes
Auto Insurance Companies that Don’t Check Credit
Virtually all auto insurance companies check your credit score as only about 10% do not. Check out here the list of offers for you that don’t require a credit check.
The problem is that finding one that does not will generally require a local search in your area. There are several reasons for this, but generally speaking there are few, if any major insurance companies that like to advertise whether the use credit scores or not when calculating your insurance premiums.
The reason why credit scores are used is two-fold. The first is that your credit score is an indication of your ability to pay back a loan. It may be a little off-putting to understand, but when you pay for your insurance one month at a time you are really taking out a loan from the insurance company. That is why there is a substantial discount when you pay for it all at once.
The second reason is that those with higher credit scores tend to be in fewer accidents. There is no known reason why, but because it does exist insurance companies will factor that into your premiums.
States that Don’t Let Insurance Companies Use Credit Score to Determine the Premium
There are currently three states that ban insurance companies from using a credit score when calculating premiums. Hawaii, Massachusetts, and California. This means that if you live in any of the three states, your credit score cannot be used in any way to set the rates that you pay.
The fundamental reason the three states passed laws curbing the use of credit scores in auto insurance calculations is because of the nearly 43 million Americans who have medical debts and low income that prevents them from obtaining a higher credit score. There is also the statistics which show that minorities are often subject to lower credit scores for a variety of reasons.
Unless you live in the three states above or find a local insurance company that does not use your credit score, your rates will be determined in part by your credit rating. That’s why it pays to improve the credit score when you can to enjoy lower premiums.
What to Look for in No Credit Check Car Insurance?
This means that you can pay under the new policy which may provide lower rates if that is the sole factor in your premiums going up. However, if your insurance company has no such policy or will not allow you to take advantage, then there are other options.
Get to know the benefits of having a decent credit history.
Free Quotes: When searching for coverage without credit check, you should get free quotes from insurance companies that provide such a service. That way, you can find the low cost car insurance with no credit check that best meets your needs.
Also, be sure to keep us in mind when you are looking for such coverage. We will provide a free quote for drivers who have a bad credit score so that you can get the best deal possible.
Find the Parameters: Basically, when looking for cheap car insurance without checking the credit score, understand all the factors that may be involved in their free quote. You may find that different insurance companies look at different factors in making their determination.
Remember to Negotiate: You should use all of the positive factors on your side when negotiating for cheap car insurance without credit check. This means the driving record, age of your vehicle, your age and so forth. Every factor that you can bring into the negotiating process on your side will help you get the right insurance for your needs.
The Bottom Line:
Remember that if your credit improves over time, you can then seek out the opportunity to review the policy and perhaps get an even better deal. The good news is that you can find no credit check auto insurance at rates that are affordable. All you need to do is start looking.
Our website is a great place to begin your efforts at finding auto insurance with no credit check that fits your budget.