Your credit score can affect more than just your ability to get a car loan, it can also affect the rate you pay for auto insurance quotes. Many insurance companies use your credit score in addition to your driving record and type of vehicle as a way to give you a rate.
If you are trying to get a new policy and have a spotless driving record and a family type car, but a low credit score,
your rate will probably be higher. Insurance companies use your credit score to determine how responsible you are. If you are poor at paying your bills, they tend to think you will not be a responsible driver. This is true even if you have not had an accident or a ticket.
Get auto insurance for a teenage driver with a low credit score, and you will most likely hear prices well above just the rate for a teenager. The teenaged driver is in a rate class by themselves, but if you couple it with a low credit score the rate will be even higher. Apparently insurance companies think your credit score will also affect their driving. Maybe they also think it has impacted your parenting skills too. Why all these rate hikes? Have you have been with the same insurance company for years and then all of a sudden get a rate hike even though nothing changed? If you have, it may be due to your credit score. Many companies will check your score on an annual basis when renewing your policy. Some even check your score every six months!
Why your credit score is in part used to determine your overall worthiness is beyond me. There can be many extenuating circumstances that lead to a low score. Going through a divorce, the death of a spouse or losing a job can all affect your score. Some credit companies don’t really care why you can’t pay and will send a negative report to the credit bureaus in as little as 30 days.
It’s not fair, but no one ever said life was fair.