Auto insurance rates are determined by a variety of factors. Every company uses a different underwriting process, but most take into account a driver’s credit score. If you want to know more about how your score will affect your rates, here are answers to a few of the most common questions people have about this.

4 FAQ About Auto Insurance & Credit Scores

How does my score affect my premiums?

Auto insurance companies set rates based on each driver's individual risks. These providers factor credit into the equation to identify patterns of behavior. For example, if a driver practices risky financial habits, such as accumulating credit card debt, they may also have risky driving habits, such as speeding. As a result, lower credit scores are associated with higher premiums. 

What activities impact my credit score?

Not all factors that play into the score are in your control. For instance, you can't increase the length of your credit history.

However, the most significant components are easily changeable. Unresolved accounts, especially those in collections, have negative impacts. Late payments stay on your credit report for up to seven years, so aim to pay credit card, utility, and other bills on time.

What other factors affect my premiums?

Along with your credit score, insurance providers consider a range of components to determine your rates. Age is one of the most impactful, as drivers between the ages of 15 and 19 cause around $13.1 billion in coverage costs annually. Drivers aged 75 or older, on the other hand, are at an increased risk for fatal crashes. As a result, teenagers and seniors can expect higher rates. Additional factors include gender, marital status, and location.

How can I reduce my premium?

Practicing good financial habits is the key to boosting your credit score, so set reminders on bill due dates to ensure you pay everything on time. Additionally, work to reduce debt and pay off all credit card balances monthly.

Since raising credit scores takes time, you may also want to use short-term savings opportunities. Many insurance providers offer discounts for bundling multiple policies and taking driving courses. 

Make sure you're protected on and off the road with auto coverage from Mazzola Insurance in Rochester, NY. This independent insurance agency works with a variety of providers to help you find cost-effective policies. They also insure high-risk drivers. Ask about their about driving course discounts by calling (585) 266-7130 or visit them online to learn more about their products.