June 27th, 2014
A healthy credit score can make all the difference when it comes to car insurance premiums. A recent study conducted by financial information website WalletHub found that drivers who do not have credit history pay more for car insurance. This is especially prevalent in Wisconsin, where drivers with no credit score pay 80 percent more for car insurance premiums, as opposed to those who do have established scores.
The 2014 Car Insurance By Credit Score Report stated that this gives Wisconsin the 12th-biggest price differential, while the national average is still high at 65 percent. A credit score is one of the key factors insurance companies will look at when trying to devise a price for coverage, as it can predict a driver's level of risk. WalletHub agreed with this assertion but is worried that some people are getting unjustly higher premiums because there are unchecked mistakes on their credit reports.
The report was devised from insurance quotes from five different insurance companies for two hypothetical, almost identical drivers. The theoretical driver is a 36-year-old man, who is unemployed and drives a 2008 Honda Accord. The only difference is that one driver doesn't have a credit history and the other has excellent credit.
Findings from the report:
John Kiernan, senior analyst with WalletHub, said this report should be an eye opener for drivers that don't take care of their finances.
"Hopefully that will lead people to give a little more TLC to their credit scores, and manage loans and credit cards more responsibly," Kiernan told the Pittsburgh Post-Gazette.