Credit score plays a role in insurance premiums

There are a number of myths surrounding auto insurance coverage, which may result in car owners thinking they are covered when they are not. Other falsehoods may prevent consumers from taking the necessary steps to ensure they're obtaining the lowest premiums.

To combat these myths, Investopedia recently released a report sharing the truths behind some commonly believed insurance practices.

For example, many consumers think their credit scores do not affect their insurance rates, but this is often not true. A number of auto insurance providers will take people's credit scores into account when determining their rates because the three-digit number may reveal how responsible they are. A higher score often translates to lower risk; to a lender that means the consumer may be less likely to file a claim.

Consumers who want to obtain the best available rates should therefore make sure their credit reports and scores are in order. In some cases, people's scores may be unfairly affected by a credit reporting error, causing them to lose out on low premiums.

Individuals who spot an inaccurate or questionable item on their credit report may want to contact a credit lawyer who has experience working with the credit bureaus to resolve these types of errors.