General objectives that guide the activities and relationships of one state in its interactions with other states.

Source:ridetime.ca

How Does Credit Score Affect Car Insurance Rates?

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Not many people are aware of the fact that majority of the insurance companies make use of the credit score in order to determine the amount of money that you can pay as the EMI for the auto insurance premium. The main reason behind doing all this is that the auto insurance companies claim that the one who does not have a proper credit history has more chances of being in a collision or claim. And only because of this supposed risk for the financial loss a customer has to pay more than the original cost of the insurance installment.

Source:caradisiac.com

You will be surprised to know that even if you have not encountered any sort of accident with your car, but also then you need to pay almost twice for the same insurance that your neighbor pays. And this is only because of the low credit score. It has also been noticed that a car insurance company makes use of a complex algorithm in order to determine the premium of the insurance for the one who has a bad credit score. This entire process is completely different than determining the credit score of a person, but the outcome of both the process is almost the same.

That is if you are supposed to have a bad credit score, then it is obvious that you will high risk. Does credit score affect car insurance rates or not? According to generalinsurance.com, You can understand this by the recent advertisement of the car insurance company, where they offer a discount to the one who has a good track record of their credit score. On the other hand, the person with an average credit score will have to pay a moderate rate for their car insurance policy.

If you still have a doubt regarding the reason why the insurance company makes use of the credit information to determine the insurance rates, then you need to read the below lines carefully. The insurance company feels that there is a direct relationship between the credit history of the customer and the claim that is expected to occur. Hence, they have made an analysis that a person with a good credit history is more profit for them as they have fewer chances to raise a claim. When you walk down to the market in search of car insurance rates, then you will find that there are some insurance companies who still make use of the driving history, age, type of vehicle and your resident in order to determine the insurance cost. Moreover, if you are about to take insurance for your sports car, then it is likely that you need to pay more for its insurance. If you do not have any credit history report, then you may not find car insurance for you from the companies who make use of credit score to determine the premium of the insurance. But you must keep one point in your mind that a company who does not make use of the credit score to determine the insurance rate will definitely use some other factor.

Source:pinterest

There are some other methods too that are used by the insurance company in order to look directly to the actual credit report. Some also make use of the insurance credit score; it is nothing but a statistical analysis of the report, which predicts the likelihood of the person to raise a claim. The insurance company makes use of all this process so that they do not run in a loss at the later stage.



Ricardo is a freelance writer specialized in politics. He is with foreignpolicyi.org from the beginning and helps it grow. Email: richardorland4[at]gmai.com

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