Pros And Cons Of Car Insurance

Most car insurances determine the amount you pay based on your credit score. The logic behind this is that those who tend to have lower credit rates are also more likely to have a poor payment history through-out their life and make more claims. This is also used to view previous credit history; if you have a poor credit history due to frequent missed payments the insurance company can protect themselves by you paying a higher rate in case you repeat your poor payment history. This is the insurance company helping you out but also protecting themselves because you are a liability. The rate is based on several different factors of your credit score and history. This includes your credit history, the type of credit, how many credit inquiries, …show more content…
Anyone who would argue that this is bad or that this is smart both have a valid argument and would be right. The pros of this is that there have been studies on why this is a logical decision meaning that it 's not something insurances do to make more money or to be an inconvenience. Through these studies show a correlation that a lower insurance credit based score means more claims. Another pro is you don 't have to worry about every little car blunder making your insurance rate sky-rocket because under the credit based ruling you are protected from that. Another study showed that many consumers actually benefit from this and either aren 't effected or are effected in a positive way. Insurance rates don 't change immediately if your credit does begin to falter; so if you were effected by a recession that means your insurance rate won 't go up right away protecting you in that hard time. The different rates based on credit score help those who are less of a risk and those who are more of a risk by giving two different rates versus one. This protects those who are less risky by paying less and those who are more risky won 't drive up the scores for everyone else. This makes the rate level out and is generally all around …show more content…
California, Massachusetts, and Hawaii are the only states to not use this practice. That being said there are some things you can do about this. 1. If you see this as a complete in justice you are always able to contact your representative or even talk to your insurance company to see if there is anything you are able to do at all. Keep credit inquiries to a bare minimum. Try and work on paying off debts by calling the collector or company and seeing if you can reduce monthly payments. Make sure all information in your credit report is accurate! Pay bills on time every month. Look at other insurance companies rates and talk to other people on their experience. Finally, it may take time but stick with these steps and over time your premium will get