Vehicle value and driving record are some of the biggest—and most well-known—factors that influence the cost of auto insurance. However, many drivers are surprised to learn that a credit score may also determine how expensive premiums are. Here, learn how your score could help lower—or increase—your car insurance rates.

Why Do Insurance Providers Consider the Credit Score of Policyholders?

Apart from those in California, Hawaii, and Massachusetts, the majority of insurance companies use a credit score as a way to determine the likelihood that a policyholder will have an accident. Specifically, policyholders that have good credit scores are considered to be less likely to get in an auto accident—and be less of a financial risk for insurance providers.

Which Parts of My Financial History Influence Auto Insurance Rate?

Insurance companies only consider certain aspects of credit histories when preparing quotes. For example, if you have a long credit history and have repaid all debts on time, your auto insurance rates may end up being lower than others. By contrast, holding a large amount of debt or missing payments can make it more expensive to insure your vehicle.

Will Having a Good Credit Score Prevent Me From High Premiums?

Even if you have a favorable credit score, other factors may cause your premiums to increase. Those who live in busy metropolitan areas and have good credit, for instance, may still have higher premiums than those with bad credit living in rural areas.

What Can I Do to Improve My Credit Score & Insurance Rates?

If a bad credit score is causing your car insurance rates to skyrocket, there are ways to improve it. The best approach is to reduce total debts and minimize the use of credit cards as much as possible. It’s also a good idea to check your credit score periodically and resolve any issues you may be unaware of.

While keeping a good credit score helps make auto insurance more affordable, who you purchase your policy from also plays a big role. That’s why motorists of Edina, MN, trust Farmers Insurance: Daniel Oliver. Understanding all the important aspects that could impact your premiums, Daniel Oliver uses his industry knowledge to make sure you’re given the fairest and lowest premiums from one of the top providers in the nation. Visit this agent on Facebook to learn more about his services, and call (952) 925-4454 to request a personalized car insurance quote.