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Ask Your Advocate
Good Credit = Better Rates?
By Sonia Alleyne
Q: I have been driving for more than 20 years with an impeccable driving record. I have no points on my license. I assumed my driving history would grant me great insurance rates, now I’m finding out that my credit rating — which is not so stellar — has a greater impact. Is this true?
–C. Jacobs, Laurelton, New York
A: Your driving record is a very important determining factor in premium costs for car insurance. Unfortunately, for those with poor credit scores, a growing number of insurers are starting to consider an applicant’s credit as well. Auto insurance representatives increasingly believe that if you’re reckless with your finances, you are less than responsible, making you a risk. “They believe it is an accurate predictor of loss,” states Jeanne Salvatore, vice president of consumer affairs for Insurance Information Institute (www.iii.org). “Insurers have found that people with bad credit scores file more claims.”
Remember that other factors contribute to your premium rate: the type of car, its safety and theft records, your age, residence, whether or not you have a garage, whether or not you drive to work, etc. “Opting for a higher deductible on comprehensive and collision insurance can reduce your premium 10% to 15%,” offers Salvatore. “And for an older car not worth more than $1,000, you might consider dropping comprehensive and collision.”
With insurance rates expected to rise an average of 6% this year, it’s important to shop around. For $12, Consumer Reports Auto Insurance Service (800-808-4912 or www.consumer reports.org) is a service that will list up to 25 of the lowest-priced policies.