Every state but New Hampshire requires auto insurance, and most insurance companies take applicants' credit scores into consideration when determining their premiums. In New Jersey, a recent study reveals how your credit score has a bigger impact on how much you pay than in other states.

Car Insurance
Helder Almeida, ThinkStock

The 2016 Car Insurance & Credit Scores Report, produced by WalletHub, shows New Jersey with a 90 percent "premium fluctuation," which means that drivers with no credit pay an average of 90 percent more for their insurance than do motorists with excellent credit. The national average is 53 percent.

"The premium fluctuation in New Jersey does seem high compared to the rest of the country, though it's not the highest," said Christine O'Brien, president of the Insurance Council of New Jersey.

In the WalletHub study, Michigan's premium fluctuation was the highest in the country, at 122 percent. New Jersey's immediate neighbors all had lower numbers: New York, 29 percent; Pennsylvania, 67 percent; and Delaware, 55 percent.

The New York City-based Insurance Information Institute, an organization dedicated to improving public understanding of insurance, lists on its website eight auto insurance myths, one of them being that credit has absolutely no effect on insurance rate. But while it is important, according to O'Brien, it is not the only criterion for insurance companies.

One thing that a credit score can do is predict the likelihood that a driver will file a claim, because it is indicative of how that person manages his or her money.

"That's just one factor that some companies use. Not all companies look at that," O'Brien said. "We have a high-expenditure auto insurance rate in New Jersey, with many factors that play into that."

Other determinants include the types of cars — and the prices of those cars — that New Jerseyans buy, as well as the number of cars on the road and the frequency and severity of accidents.

"The potential for high frequency of auto accidents in New Jersey is always a concern of auto insurers across the state," O'Brien said.

Her advice to consumers worried about the impact of their credit scores is to shop around. With more than 80 carriers currently writing in the state, viable options can be found online or through an agent.

Conversely, if a driver has a good-to-excellent credit score, the Insurance Information Institute recommends asking insurance companies for credit-related discounts that may actually drive down premium costs.

Patrick Lavery anchors and produces newscasts across all dayparts for New Jersey 101.5. Follow him on Twitter @plavery1015 or email patrick.lavery@townsquaremedia.com.

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