Most people know that a bad driving record can have a negative effect on premiums for Car Insurance in Gallup, NM. However, the role that a credit score plays in determining car insurance rates is not widely known. A safe driver with a low credit score may be offered car insurance rates that are similar to a driver who has had one or more recent accidents but has a better credit score than the safe driver. Knowing your credit score and taking steps to improve your credit can mean more money in your pocket when you pay your annual car insurance premium.
There are two parts of your credit that seem to have the most influence on your car insurance premium. Those two factors are your credit utilization ratio and your payment history. Credit utilization ratio is determined by the amount of credit you have outstanding versus the total amount of credit you have available to you. If you have one or two credit cards and they are both maxed out, you will likely pay more for your car insurance than someone who has a small balance with a lot of available credit. You may be able to lessen the impact of maxed out credit cards by consistently paying your credit card bills on time. On-time payments also have a positive impact on your credit score.
Other credit issues can also cause your rates for Car Insurance in Gallup, NM to go up, though they don’t have as significant of an effect as credit utilization and payment history. Negative accounts on your credit report such as collections and judgments can be used against you when your car insurance company computes your premium. If you want the lowest rates for car insurance, it is important to manage your credit wisely.
Fortunately for drivers, all car insurance companies do not use the same formula to determine rates. By getting your car insurance through an independent agent like Mr. Insurance you may be able to secure one of the lowest available premiums based on your credit worthiness. As you work to improve your credit, be sure that your insurance company reviews your credit score every time your renew your insurance.
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