If you have bad credit, you may be finding that getting a good deal on your car insurance is not an overly easy task. In the world today, more and more people are finding themselves in serious financial trouble and bad credit is dramatically on the increase. It is restricting people’s lives and it often causes them to get into deeper financial trouble, as the cost of things such as their car insurance goes up.
Finding Good Car Insurance Deals With Bad Credit
While it may be slightly more difficult finding a good deal on your car insurance when you have bad credit, it is certainly not impossible. There are some companies that deal specifically with people who have a bad credit history and they offer special deals to suit your needs. Even if you cannot find a good deal, there are also other ways in which you can improve your situation to get a good deal.
Some of the main things that you can do to purchase good deal car insurance with bad credit include:
- Improve your credit rating
- Compare different companies
- Take out a bad credit loan
- Purchase a cheaper car
- Don’t accept any extras on a loan
- Make sure you have a full time job
All of the above will really help you to get a good deal on your car insurance. The main thing that you should aim to do ideally would be to improve your credit rating. Paying off most of the debt that you have will help to improve your rating and insurance companies will be more willing to give you a better deal. You could also apply for a credit card that you could use specifically to get your credit rating up. By making small purchases and paying off the full balance at the end of the month, you will help to improve your rating. Just remember not to use the card for anything else. Read the rest of this entry »
Words most people never thought they’d see together - “bad credit auto insurance.” You probably already know that there are many factors that affect your car insurance premium. But I’ll bet you never realized that credit was one of them!
No insurance company wants to pay claims so they calculate the risk associated with a person, and that determines the premium you pay. And having bad credit is one factor among many that insurance companies use when factoring in your “risk potential.”
Below are the major risk factors that car insurance companies use when determining your rate. Age
Statistically, drivers under the age of 25 are at greater risk of being in an accident than those over age 25. They are also the ones with the least amount of credit history, and often have some bad credit. Using a bad credit auto insurance broker can probably save these people the most money over using one of the bigger companies. 25 is a major turning point (especially for men) in auto insurance. This is the age where most insurance companies consider you a “responsible adult” and you should see a drop in your rates.
Drivers between the ages of 50 and 65 generally have the safest records. Read the rest of this entry »
Many personal car insurance companies consider your credit information when determining how much premium to charge for your insurance. So if you are calling around for new car insurance, keep in mind that many insurers are looking at your credit history to determine your car insurance rates. I hope that we will be able to let you know why and how they do this.
The reason that some insurance companies use credit information is because they feel there is a direct correlation between consumer’s credit history behaviors and expected claims that may occur. Therefore, they feel that people with better credit behavior are less likely to severe insurance losses.
Many insurance companies still use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance. Therefore, if you have not established a credit history yet, the companies that use credit history may not be best for you. They may not allow you to be eligible for certain discounts, which could result in higher premiums.
The companies that do use credit scoring will still use other factors in determining your premium. They will also use your age, driving history, type of vehicle, where you live in determining how much you should pay for your insurance.
Is it fair for an insurance company even look at my credit information without my permission? The answer is yes. The Federal Fair credit-reporting act says “Reasonable procedures. It is the purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title.” This can be found at http://www.ftc.gov/os/statutes/fcra.htm Read the rest of this entry »
The issue at hand is the use of a consumer’s credit score as an underwriting tool for auto insurance rates. What is a credit score or FICO score? A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower’s credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Isn’t it interesting that the score most important in our financial lives, our consumer credit score does not even contain full disclosure? As stated above the Federal Trade Commission has ruled that it is ok for Fair Isaac & Co not to disclose the algorithms used in this process, but what about consumer rights.
While it is important to understand what a FICO score is, it is not the main issue of this paper, insurance rates are. So where is the connection? All the public knows is that Fair Isaac tells us there is a high correlation between people with bad credit and high risk drivers. This notion is insane and from what I can see from this black box approach, there is no real causation between the two.
This type of reasoning is similar to convicting a person of something before they have even committed a crime. For instance, let’s say I do a study and that study shows there is a high correlation between criminals and people with bad credit. Is this to say that just because you have bad credit you are more likely to commit a crime and therefore you should be profiled or perhaps locked up because you are a risk to society? Read the rest of this entry »