Contact Us
Make My Homepage

Bad Credit Scores Could Affect Auto Insurance [AUDIO]

Your credit score could have consequences past credit cards and home loans as auto insurance companies are also using it to determine rates.

Flickr User The Truth About

A report from found drivers with bad credit paid up to 91 percent more than those with the best scores, and drivers with average scores paid 24 percent more.

The process of looking at credit scores by auto insurers isn’t new, according to Chuck Leitteb, Vice President of the Insurance Council of New Jersey, with forty states nationwide doing it.

“It can be one of many factors when a company underwrites a policy, but it can’t be a sole factor to base rates on,” Leitteb said.

He said because insurance underwriting is all about risk, and a person’s credit score gives companies a preview of the potential cost they’d be incurring.

“There have been numerous national studies that have been conducted that show, people who handle their finances in a responsible manner are less likely to file claims,” Leitteb explained.

The practice cannot be used in all instances. Leitteb said the New Jersey Department of Banking and Insurance has stated in instances where a person has no credit score, it can’t be used against them in a policy.

“There’s also a policy called the basic policy which is a low cost policy. They cannot use credit score on those policies because the people who purchase them tend to have less economic means,” he said.

Another important provision set up by the Department of Banking and Insurance is one preventing traumatic life events from harming policy holders, such as a catastrophic illness or an injury, a death of a spouse, child or parent, temporary loss of their job.

“Those life events they can let their insurance company know and that adverse credit for a period of time cannot be considered.” Leitteb said.

Other factors that can affect insurance policies are age, gender, driving record, and past claims.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Best of NJ101.5

Recommended For You

Best of the Web

Leave a Comment

It appears that you already have an account created within our VIP network of sites on . To keep your personal information safe, we need to verify that it's really you. To activate your account, please confirm your password. When you have confirmed your password, you will be able to log in through Facebook on both sites.

Forgot your password?

*Please note that your prizes and activities will not be shared between programs within our VIP network.

It appears that you already have an account on this site associated with . To connect your existing account just click on the account activation button below. You will maintain your existing VIP profile. After you do this, you will be able to always log in to using your original account information.

*Please note that your prizes and activities will not be shared between programs within our VIP network.

Please fill out the information below to help us provide you a better experience.

(Forgot your password?)

Not a member? Sign up here

Sign up for New Jersey Insiders quickly by connecting your Facebook account. It's just as secure and no password to remember!

Sign up to have exclusive New Jersey Insiders contests, events, coupons, presales, and much more delivered to you for FREE.