Many car owners are aware that their credit scores play a factor in their auto insurance premiums, but some may not realize how much money they may be losing as a result of bad credit.
A recent study from CarInsurance.com found that drives who had a FICO credit score higher than 750 saved an average of $783 annually on their insurance rates. Individuals within the highest credit scoring bracket receive lower premiums because insurers think their reduced financial risk will translate into fewer risks on the road.
The average premium for a driver between 16 and 24 who has a clean driving history and complete auto insurance coverage is $3,152 per year. An individual who meets the same criteria, and who has a strong but not elite credit score in the range of 650 to 749, pay an average of $2,387 a year – a difference of $765.
Because credit scores can save consumers hundreds of dollars a year on their auto insurance, many may want to explore different strategies to get their three-digit numbers into a better scoring bracket.
In order to do that, some may benefit from reviewing their credit reports for questionable or troublesome items, such as an inaccuracy or an unverified mark, which may be unfairly lowering their scores. Removing these blemishes may help raise a person's number high enough to qualify for a lower premium.