How do credit cards affect your insurance rates? The idea
sounds absolutely preposterous; doesn’t it? Even the
thought that having too much credit card debt, or possibly
paying your credit card bill late, or even becoming
delinquent on your credit card bill, could affect your
insurance rate is just too far fetched; right? Wrong!
What many consumers don’t know is that in many
states, insurance companies have lobbied, and won the right
from the legislature, to gain access to your credit report.
Laws have been passed that allow insurance companies to
check your credit to determine your insurance premium
rates, or even deny coverage based upon your credit rating.
Supposedly, the argument by insurance companies has been,
that if a consumer pays their bills late, or is delinquent
on their bills, or is irresponsible in accumulating too
much debt, then the consumer is obviously irresponsible in
all aspects of life. This would supposedly include,
driving irresponsibly and paying insurance bills late.
This in turn; as they argue; would make the insured a
high-risk driver.
What’s most interesting about these laws, is that
many states require consumers to have a minimum amount of
liability coverage on their automobiles. Many states can
impound your vehicle, issue hefty fines, or even jail
offenders who refuse to pay for mandatory automobile
insurance.
Okay, so what if you have such a bad credit score, that you
can’t get automobile insurance? Hmm...that’s a
good question. In the states that force consumers to buy
automobile insurance at rates that are determined by the
insurance industry, based upon your credit rating, there
are usually special state-run insurance programs that are
for high-risk drivers and consumers that have bad credit
score. So if a consumer can’t get automobile
insurance because of a bad credit score, then they would be
grouped along with high-risk drivers.
What is a high-risk driver? A high-risk driver, is someone
who has been convicted of driving while intoxicated,
driving under the influence, vehicular manslaughter, drug
possession, or it could just be anyone who has an excessive
amount of traffic tickets or numerous accidents on their
driving record.
Now back to the initial question: “How do credit
cards affect your insurance rates?” Answer: Too much
credit card debt, too many late credit card payments, and
any credit card delinquencies on your credit report, and
you’re looking at a hefty insurance rate.
----------------------------------------------------
Bryan Pringle, Ph.D., has written many articles on the
credit industry, and is the webmaster of websites offering
news and information regarding credit cards. For more
information, please visit:
http://www.apply-forcreditcards-online.com
No comments:
Post a Comment