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How Your Credit Score Can Influence Your Insurance Premium

Car owners who decide to get a Virginia cheap car insurance should also be aware of the implications their credit score might have on their premium.  While your credit report is a detailed account of all your financial history, past payments, failed payments, demand for credits, respect of payments, outstanding depths, the credit score is a single number that represents everything in the credit report.

Fortunately for insurance companies, they have been able to show proof that a there is a link between a person’s credit score and their likelihood of filing a claim. Credit scores are calculated by assigning numerical figures to each part of the credit report and then applying a mathematical algorithm to get the score. Different insurers associate different importance to certain aspects thus they will customize the credit score rating to meet with their goals.

Some companies will use your credit score to underwrite your policy. At the time you send in your application, you should be notified that your credit score will be consulted in the process. They should also make you aware that you have a right to ask for your report to be updated at least once during the premium year. It is also the insured person’s right to question any doubtful information. Note that by federal law, the insurance company does not need your permission in order for them to get your credit rating.

Insurance companies may use your credit rating to determine the amount of premium you will pay. A high rating could results in lower premium. For those with no credit history, insurance companies have a number of options. They could treat such people on a neutral basis that is, assuming an average rating. They could simply ignore the credit rating as a basis for underwriting. They can also underwrite such persons according to their company policy. In as much as an insurance company has the right to refuse anybody insurance coverage based on their credit score, it cannot issue a nonrenewal on the same grounds. Any action taken by a Virginia cheap car insurance company base in part or whole on your credit score, they are obliged to tell you the basis for the decision or at least let you know that you can ask for this information. Factors that are not to be consider when calculating credit scores include, zip code, race, income, gender and ethnic group.

Anybody can order their credit report for free from any of the three nationwide consumer reporting companies once in a year. This is a provision of the law. When ever in doubts, you can contact the Bureau of Insurance for more clarifications. For those who wish to file a claim, they may do so through writing, fax, email or directly on the Bureau of Insurance’s website. However, it is important you try to sort out things with your insurer before contacting the bureau.

The essence of Virginia cheap car insurance is to enable car owners get the best out of their coverage. You are encourage to put in your zip code above and click compare to get an idea of the possible quotes you should expect in your area.