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Poor Credit And Auto Insurance

Regardless of how they’re derived, the scores are supposed to predict who is more likely to file a claim. The more likely you are to file a claim, the higher your insurance rates. Watching your Credit Score is fine advice if you have perfect or near perfect credit. Unfortunately, it does little to help the 1,112,000 Americans who filed for bankruptcy last year or the millions who have below average credit. For these people, trying to find affordable auto insurance can be a very real problem, with monthly insurance premiums equaling or surpassing monthly car payments. Even those who have excellent credit may still pay higher premiums just because they applied for a loan, a credit card, or obtained some other type of credit within the previous year of receiving their insurance policies. If all this sounds a little unfair to you, you’re not alone.

Twenty-two states have tried to enact legislation that would control the use of “Risk Scoring.” As expected, due to the strength of the insurance lobbyists, most of this legislation has either been dropped or watered down to the point it does little to protect the consumer. Three states California, Hawaii, and Massachusetts, -have stepped up to help all consumers, especially those with less than perfect credit by banning the use of credit scores and history in determining insurance policy acceptance and premiums. That’s great news for people who live in those states but, aside from moving, how are the rest of us able to save money on our auto insurance? Choose an insurance company that DOES NOT use “risk scores.” Nearly 10% of insurance companies don’t use this scoring policy. Their premiums are based upon your driving record, not credit score. These companies tend to be smaller, but what they lack in size they more than make up for with excellent customer service. Some cater to specific organizations or professions. Most have “A++” to “B+” financial ratings which means they will be there if and when you ever need them. As good as these companies sound, remember to keep one thing in mind: even though these companies don’t use Credit Scoring to determine premiums, it doesn’t mean you’ll automatically receive a lower premium. Chances are you will, especially if you have credit problems, but you still need to shop around and compare prices. Just make sure you’re comparing the same coverage from each insurer. The only down side to using these companies is finding them. They don’t advertise the fact they don’t use risk scoring so you may have to do some investigating on your own. You can start by contacting your state’s insurance department.