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Most people think the car they drive or their driving record plays the biggest part in determining auto insurance rates. While these factors do play a big role, a persons credit rating is more important than ever. People that have very low credit scores, under 600, can be classified as a high-risk motorist. This results in premiums which can be 50% or higher, than those with good scores above 700. Good drivers often search for direct auto insurance with no credit check, to compare insurers that don’t require a background credit review.
Some Insurers Won’t Insure Poor Credit Customers
Some consumers have extremely bad credit. This means multiple unpaid bills, bankruptcies, and other serious financial issues. Insurance carriers are all about mitigating risk. They view these types of consumers as high risk. These people not only get into more car wrecks and get issued more tickets, but they also tend to commit more insurance fraud and inflate claims. Also, they tend not to pay their premiums more frequently or cancel their polices altogether more often. This results in carriers frequently losing money and raising premiums for everyone.
As a result of these and other factors, many insurers refuse to cover those with credit scores below 600. If you have bad credit and get rejected by a provider, don’t give up. Do more research into companies like The General that offer coverage to higher risk customers.
Many people are responsible for their finances, but due to a business or personal event, such as a divorce, have seen their score go down. The good news is some carriers offer direct auto insurance no credit check. They provide high-risk coverage, at rates that begin at about $100 per month. Enter your zip code and compare online rates today.
Why is Direct Auto Insurance No Credit Check Favorable?
Many companies check a person’s credit because it is a useful measuring tool to determine someone’s risk. Each type of insurance: automobile, homeowners, health, and life carries inherent risks to the company underwriting the policy. The higher the score, the more responsible a person is likely to be. For example, someone that takes care of their finances is probably going also to take care of their physical health. This means they are less of a risk to insure, both for a health and life insurance policy. Good credit scores above 700 will help you get better rates on all types of insurance, not just automobile. In this case, you wouldn’t need to get direct auto insurance no credit check. These companies refuse
Take Steps to Increase Your Credit Score
If your score is low, do not take it personally. Bad things happen to all of us, including uncontrollable financial events. Your insurer will not single you out; they will classify you with others, that also have low scores. You can take effective steps to increase your credit rating. Here are just a few tips:
- Pay All Your Bills on Time. You need to pay your monthly bills anyway, so it only makes sense to pay them on time, or better yet early. Doing so will raise your score.
- Pay Down Maxed out Credit Cards. Having multiple credit cards that are all maxed to the limit can hurt your credit rating. Take action and pay off as much of the balance as you can. This will raise your score in only a few months.
- Review your Credit Report. At least once a year, you should take a close look at your credit report. Look for any false items that should be removed. The cleaner your report is, the higher your score will go.
What is a Good and Bad Credit Score
Experian, a leading rating firm, views a good credit rating at 700 or above. However, what may be a good score from one company might not be so from another. 700 is a good threshold and a target for many consumers. The vast majority of scores are between 600 and 750. A score below 600 is considered bad. Those with a score under 600 may find credit and insurance inaccessible.
Check Your Credit Once a Year
Several websites, like CreditKarma.com, allow anyone to check their credit rating for free. Before you compare auto insurance quotes, go over your credit report to make sure it won’t adversely affect your premium costs. You are allowed to get a free report once a year, so take advantage of this and check it annually. There are 3 main credit reporting firms: Experian, Equifax, and Transunion, and they all have easy to use and secure online websites.
Auto Insurance Companies that Don’t Check Credit
Three states have passed legislation prohibiting insurers from using credit as a factor in pricing premiums. These are California, Hawaii, and Massachusetts. Lawmakers passed laws to prevent discrimination against low-income wage earners, which made car insurance unaffordable to those that had bad credit. This often resulted in people driving illegally without any coverage.
You can get direct auto insurance no credit check in these select states without submitting your social security number. Several providers, including Progressive, Allstate, and Esurance, will give you quotes online without checking for your credit.
If an insurer requires you to enter your SSN or social security number, they will probably use it to do a credit check, so be advised. Compare direct auto insurance quotes with no credit check and get the best online rates. It only takes about five minutes, and you can save hundreds instantly. Get started now by entering your zip code.