Bad Credit Score Could Impact Car Insurance Rates

Monday, November 9th 2015, 6:24 pm
By: News 9

An Oklahoma lawmaker is taking a closer look at how insurance companies charge for rates, and it involves your credit score.

You'd think your driving record would be the biggest indicator of your driving and your likelihood of filing a claim, but it's not necessarily how you handle the wheel. It's how you handle your credit that could impact you the most.

"What a lot of consumers don't realize is that when they apply for insurance in Oklahoma most of the major companies are using an insurance score as part of the rating process,” said Von Nix of Statewide Insurance Agency.

So while you could expect a pretty good rate based on your driving history, your payment history could as much as double what you pay for insurance.

Insurance companies use what they call an insurance score.

"That insurance score is other language for just the credit type score that's used, and it does impact the consumers rate significantly with most companies,” Nix said.

"It really becomes more concerning when you look at it from an auto insurance point, especially in Oklahoma,” state Sen. Rob Standridge said.

Standridge is exploring the issue to see if there is anything that can be done to better serve consumers.

"We do have the worst rate of uninsured motorists in the nation,” he said. “26 percent of drivers are uninsured."

Nix said there are always exceptions to the rules.

"The companies have found that the credit score or the insurance score is a good indicator of responsibility and stability that somebody has in their life,” he said.

Those people, he said, reportedly file fewer claims. It is a formula that may make sense to insurance companies, but it is a sensitive subject of not only higher insurance rates but higher rates of the uninsured.

"When you look at that and you think of the pricing mechanisms that are being used, it makes you wonder is that contributing to that?" Standridge said.

Using an independent insurance agent or an agency that can shop around with different insurance companies for better pricing is often the best option for those with lower credit scores.