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
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 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
- Where you live
- How many insurance claims you have had to file in the
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
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.