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Free Auto Insurance Quotes - Does Credit Rating Affect Insurance Rates?

Almost everyone is becoming aware of auto insurance quotes online, but a lot of people do not know that eventually, the quote depends to a large measure on the insurer's credit history.

Surveys have shown that a large percentage of auto insurance companies examine the customer's credit history to decide on the premium amount levied on him. However, the credit rating is just one of the several underwriting tools that insurance companies use. The other indicators are markers such as driving record, the kind of vehicle you own, the location of the car and even your age and gender.

Why is the Credit Rating Important?
The credit rating is used by insurance companies because it indicates clearly the potential risk of advancing a# loan to the car owner. There is undoubtedly a strong connection between past credit record and the potential risk. In other words, a customer who has previously defaulted on loans is far more likely to default again as compared to a customer who has a clean credit record. Even of you ask for free auto insurance quotes, seemingly a harmless thing; your credit record will come into play.

What makes up a Credit Record?
A credit record is a fairly comprehensive document that covers information as basic as name, age, gender, addresses and place of birth. It then goes on to list the history of the customer's payments to institutions such as banks, retail stores, mortgage companies and finance companies. It also includes information of any legal judgments against the customer as well as records of any foreclosures or bankruptcy declarations. Interestingly, the credit record also throws up a history of the parties or institutions that have accessed the customer's credit record.

This list reveals a great deal to the insurance company and shows not only where the customer has defaulted but the kind of credit he has shown an interest in as well as the parties he has approached along with the frequency of taking credit.

So while free auto insurance quotes seem like an easy thing, remember that this will mean a visit to your credit record.

It follows from this discussion, therefore, that to get better free auto insurance quotes, one thing you need to do is to improve your credit rating. This means some simple measures like paying your bills on time and keeping a low or a zero balance on your credit card.

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