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SALT LAKE CITY — You may already know that your credit score affects your auto insurance rate, but a new report shows the affect is more than many people expected.
The report from WalletHub finds car insurance rates nationally fluctuate by around 65 percent based on credit score alone. In Utah, that number is closer to 75 percent.
Independent insurance agent Dave Platt said studies have shown a high correlation between a driver's credit and the likelihood of him or her filing a claim.
“If you’re heavily extended and in debt, and you have way too much debt for your income, we don’t know why, but there’s something about that correlation that those kind of people tend to have more insurance claims,” he said.
While many drivers might not like insurers using credit scores to determine premiums, only three states forbid the practice. Utah isn't one of them.
“In Utah, there are some restrictions, but most insurance companies here use some kind of credit scoring,” Platt said.
The credit scoring insurers use is modified, he said. Factors that don't give the industry any predictability on insurance claims are taken out.
“If you have poor credit because you’ve got unpaid medical bills, it’s of no value in predicting your auto insurance claims,” Platt explained.
If you have a not-perfect credit score, know this: Different insurers use scores in different ways, so you might get a better deal by taking your business somewhere else.
