Will My Credit Score Affect My SR22 Insurance Rate?
Reader question:
Is it true that my credit score will have an impact on my SR22 quote for car insurance?
Malcolm
Thanks for asking, Malcolm.
It’s not so much your credit score that will impact your SR22 quote as it is your entire credit report. The majority of car insurance companies, and even other types of insurance companies, use the credit report to create an insurance risk score, which they then use as one of the major factors in your final SR22 quote. This insurance risk score is determined in a different way than is credit score. Instead of putting emphasis on the balance that you owe on a credit card or car, it will pay more attention to whether or not you are paying your bill consistently and on time.
Your insurance risk score can be the main reason that you have a high SR22 quote, even after you’ve done everything else that you can to lower that SR22 quote. The reason that companies use these scores to determine what the person’s car insurance rates will be is because studies have been done showing that people with poor credit history are more likely to file a car insurance claim. The problem that many people have with this system is that it affects people who are low income or part of a minority more often than it does other groups, and so it can be seen as discriminatory. Most states have ruled that it is not, though.
In order to get a cheaper SR22 quote, you should work on improving your credit. The most important thing to do if you are already in debt is to start paying back what you owe. You may have to do this little by little, but everything starts somewhere. Try to begin by paying off the debts that have the highest interest rates, and then move on to the ones with the lower rates.
Once you have your debt paid off, you can then rebuild your credit. It’s better not to overdo it by opening too many accounts, but you can do things such as get a gas card or buy a piece of furniture or a new laptop.
Cheers,
Fashun Guadarrama.
