When calculating your coverage premiums, practically every auto insurance companies consider your credit history. They use an algorithm that incorporates some aspects of your credit history along with other factors such as your age, sex, and driving record, all of which helps insurers determine how risky you are to insure. Ohio Insurance Center Agency in Cincinnati, OH, explains below how it works and how it affects how much you pay for coverage.

How Does My Credit Affect My Auto Insurance?

Because insurers are trying to determine how likely you are to file a claim instead of your ability to repay a loan, they assess certain information from your credit report that illustrates your stability, responsibility, and judgment. For instance, most insurance agents consider the length of your credit history, the number of delinquencies and late payments, and the types of debt you have. Other important inputs include the number of accounts in good standing versus in collections, recent applications, and the percentage of available credit currently in use.

How Can You Improve Your Credit Score & Premiums?

Making on-time payments will help, and cleaning up your history will improve your rate.  Even if you don't have a history of late payments and charge-offs, you can still improve your score by only using a small part of your available credit and keeping your oldest charge card accounts open to show a long credit history. Also, avoid applying for new cards or loans because insurers view a flurry of recent credit applications as potentially suspicious. You should also meet with an agent as each company calculates rates differently.

Though your credit score affects your auto insurance rate, it is still possible to find affordable coverage with a low rating. To see if you can lower your premium or improve your coverage at no additional cost, contact Ohio Insurance Center Agency. They've been helping drivers throughout the Greater Cincinnati area buy insurance and SR-22 bonds for more than 40 years. Call them at (513) 522-6300 for more information, and visit their website to request a free auto insurance quote.