Auto Insurance USAA: What to Do with Bad Credit
Did you know that bad credit can do as much these days to increase your auto insurance premiums as having accidents or speeding tickets?
Over 90% of the big auto insurance companies now use credit information to determine if you’re going to get a policy and how much they’re to charge you. As far as they’re concerned, people who fail to pay their bills on time and/or go bankrupt are a greater risk.
What’s bad credit got to do with safe driving? Nothing, it seems. But many insurers believe your credit report is more significant than your driving record. They argue that if you have bad credit there’s a greater risk you’ll file an auto insurance claim. Many consumer advocate groups disagree, but to avail. Credit scoring can drive up your premium by as much as 400%. It can also prevent you from being insured.
But here’s the funny part! Each company has their own credit scoring system and they can be as different as night and day. You can request quotes from two different insurers on the same day and one can offer you a discount for being a good credit risk, while the other will deny you insurance for being a bad credit risk. Go figure!
What can you do to improve your odds of getting cheaper insurance? Well, you can begin by keeping your credit report clean. It’s also good advice to always get a copy of your report and cleaning it before you start shopping around for car insurance.
For example, did you know that nearly 80% of credit reports contain mistakes and that 25% of these mistakes are serious enough to either deny you coverage or penalize you with much higher premiums? So, after checking your report, if you find any mistakes, contact the credit agencies immediately, giving them specific details and request that your reports be corrected.
Also, pay all your past due accounts, no matter how long overdue they may be. Then once you’re up to date, request your creditors to remove from your reports all mention of any late payments. If you’re persistent about this, you can usually get them to do it.
Following this advice will make a very positive difference in your credit score. However, if you are in credit trouble and will still have bad marks on your report, it’s better if you find an independent insurance agent. They’ll probably have better contacts with carriers that will offer policies to “credit risk” customers. Just be aware, though, that its going to cost you more money.