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There are many rating factors used when soliciting automobile insurance in the state of Arizona. Most people are aware of the obvious ones such as type of vehicle, limits, driving record, where the car is located. However, there are other not so obvious factors used in obtaining an automobile insurance quote.
If you’re looking to save money and make the most of company offered insurance discounts, there’s at least one thing you ought to be aware of and that’s your credit report.
Did you know that in the state of Arizona insurance companies can use your credit report in determining your auto insurance premium? According to the Fair Credit Reporting Act, insurance companies are permitted to review your credit information without your permission. According to the insurance companies, there is a statistical similarity between a policyholder’s credit behavior and the propensity to submit claims. Insurance companies feel that a person with good credit and has been responsible in their financial dealings are a better risk because they tend to have fewer claims and less severe losses.
This information is used in the process of underwriting and rating your policy. If your credit is extremely poor and it shows a high degree of delinquencies, judgments, bankruptcies, foreclosures, liens or if your report shows constant late payment and a high debt to income ratio they might not offer coverage.
Additionally, if they do decide to offer coverage, this information is one of the underwriting factors used in determining your rate. The better your credit report, the more favorable rate will be offered by the company. Conversely, riskier credit behavior will warrant a higher rate and thus a higher premium.
Before you shop for insurance, take a look at your credit report. First of all, make sure it’s accurate. Secondly, look at your credit report as if you were an insurance company underwriter. Do you think you would you qualify for a lower premium?