How To Go About Buying Car Insurance With Bad Credit  

How To Go About Buying Car Insurance With Bad Credit

You probably already understand that your credit scores and report have a large amount of influence on many aspects of your life, but did you know that your credit rating can have an affect on your ability to purchase insurance for your automobile in some states?

Good or bad, you may find your credit history directly affecting whether or not you can obtain coverage, and what premium you will end up paying if you do receive coverage. You may not have had any idea that this was happening, until you suddenly found yourself without insurance, or with a premium that appeared to be rising for no visible reason. Sure, your driving history does play a very important role in determining how your individual car insurance will work, but driving history alone cannot determine everything. To most insurance companies which handle car insurance, your credit rating is considered to be an extremely important variable and so one immediate idea that you might want to consider is getting a debt consolidation loan for bad credit in order to improve your credit score.

There are several different criteria which are combined together by insurers in order to determine whether or not to insure someone, and at what rate to insure them. As an example, when applying for insurance you may find that as well as looking at your credit score your insurer is also appraising:

- Your age
- Your current driving record
- The make, model and safety record of your car
Where you work (If your car is going to be used at all for your job)
- Where you live
- How many insurance claims you have had to file in the past.

Within about the last decade or so, many insurance companies have also turned to your credit information for insight into your credibility as a driver, as an additional factor used in order to help predict which drivers may pose more of a risk than others.

For example, many insurance companies believe that the better your credit history is, the less likely you will be to file claims against your automobile insurance policy. Additionally, they believe that the better your credit history is, the more likely you will be to be a responsible driver, which may help to snag you a much lower monthly premium (and mean that the cost of your auto insurance won't cost you a fortune!).

Having little or no credit history can seriously effect you here, as you may find yourself paying much higher monthly premiums simply because you have nothing to show in terms of your responsibility regarding making insurance payments. You may even find yourself being denied automobile insurance coverage all together, simply because you have no credit to speak of.

Buying car insurance with bad credit is not an easy feat, because many insurance companies will not want to have much to do with you until you clean up your act.

If you are denied insurance coverage because your credit history is poor or non existent, the first thing that you should try is to clean up your credit report as much as is possible.

The Federal Fair Credit Reporting Act allows you to obtain a copy of your credit report for free, once per year, from each of the big credit rating agencies which will allow you to make sure that all of the information pertaining to your credit rating is correct.

If there is incorrect information in your credit report, you will want to dispute it as soon as you can. The following are some tips to consider for helping you improve your credit score in order to obtain automobile insurance. Keep in mind that buying car insurance with bad credit is possible, but if you are approved, you will likely find yourself with a difficult to handle premium simply because your credit rating is not up to par.

  • You should try to clean your credit score up as soon as possible. It is extremely helpful for you to begin paying back old debts, but you should also make sure to pay current bills off on time, and to get rid of any credit cards which may be hurting your credit rating with high interest rates.
  • If you do not have much credit, if any at all, you should work to build at least a little before applying for automobile insurance again. The goal here is simply to show that you have the power to use credit responsibly, so try not to run up any unnecessary or excessive debt. Make sure that all of your monthly credit payments are paid on time, and always try to pay more than the minimum amount due.
  • You can obtain a free copy of your credit report from all of the three credit bureaus at least once every year for free. You should go over these credit reports with a fine tooth comb in order to make sure that all of the information contained within is accurate.
  • Make sure that you actively shop around for different forms of insurance. Prices attached to the exact same amount of coverage can vary wildly from insurance company to insurance company, so make sure that you are applying with the insurer that has the best possible option for you. It is also a good idea to phone up some insurance companies directly and have a chat with them about your particular circumstances. Just because one insurance company denies your application, or offers you an undesirable premium does not mean that you are out of luck. Keep looking, and you are sure to find an insurance company that will offer you a monthly premium that you can handle.
  • You may want to consider a higher deductible in order to save money on monthly premiums, because in all forms of insurance, a higher deductible usually translates into a much lower premium cost. Just make sure, if you choose this option, that you can cover the deductible if you are ever faced with an automobile insurance claim.

As it stands right now, using someones credit report as a means of determining whether or not to grant them automobile insurance is considered to be an industry standard and so it is important that you take steps to tackle this head on.

In order to obtain the best possible quote for car insurance, you need to make sure that you both have enough credit, and take care to make sure that your credit rating is favorable in order to obtain significantly lower premiums.

Buying car insurance with bad credit is definitely not out of the question, but tackling the root of your problem by reading your credit files and taking steps to imporve your credit rating will yield positive results in how much you have to pay for your car insurance.   Site Map - About Us - Contact Us - Terms of Use - Privacy Policy

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