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Car Insurance without Credit Scores

Car insurance without credit scores is something that people with poor credit usually find tremendously beneficial, especially in states that require insurance such as the Michigan car insurance requirements. Credit history is an important component of auto insurance underwriting, so drivers that have bad credit usually pay high rates for car insurance even if they are good drivers with a clean driving record. Having the opportunity to save money on auto coverage by avoiding a credit check can really help out drivers who have faced hard times and had challenges keeping up with their expenses. When this happens to you and you get punished with higher auto insurance rates, it makes it even harder to cope financially because you're already behind on bills even before this inflated auto premium comes through. Car insurance without credit checks can be found from certain auto insurance companies and they are worth exploring for drivers that have poor credit.

Getting Insured with Bad Credit

It is definitely a challenge for those of us with serious credit problems to get into insurance policies we can afford. But there is an option that some drivers in these straits are not aware of. There are certain companies offering policies where underwriting does not utilize credit scores in the calculation of rates and determination of eligibility. As drivers we need to explore some of these companies and try to do what we can to save money on auto coverage.

Responsibility is a major theme in the insurance industry. The term "financial responsibility" is thrown around by the various government agencies in different states putting together auto insurance laws and administering those laws, and companies abiding by financial responsibility standards likewise look for responsibility in their covered drivers.

A clean driving record, of course, is a major asset for a motorist in search of affordable coverage. But in many cases a solid credit score is just as important, because it demonstrates responsibility with your finances to the insurer. It also demonstrates, believe it or not, that you are less likely to file a claim or get into an accident. The industry has done extensive research on all of the different factors that have a strong positive correlation with driving performance. Since companies are not allowed to directly monitor your driving behavior, they resort to indirect means of observation. One of the strongest points of positive correlation they have found is between credit history and driving performance. Motorists with good credit are statistically likely to file fewer claims and get into fewer accidents at a lower cost to the insurer; and those with lower credit scores are statistically likely to file more claims and get into more accidents causing more damage and higher monetary losses to the insurer.

Understanding Personal Credit Ratings

Drivers with poor credit sometimes do not even really understand where credit ratings come from or what they represent in terms of their online car insurance rate. Without this understanding it is hard to do the things you need to do to improve your credit over time. Your credit score is determined by a credit bureau, an entity that takes various factors into account such as payment history, the amount of debt you owe, amount of open credit you have available to you as a consumer, and the age of your debt or the amount of time you have owed money. A good credit score tells lenders and others that you are trustworthy with money and that you are a good risk to lend money to. Bad scores, on the other hand, indicate that you carry too much debt as a ratio to your income, that you may have trouble keeping up with payments, and that you've generally had problems with financial responsibility in the past. Credit is important to landlords, prospective employers, and as we have noted, insurance companies as well.

No Credit Check Auto Insurance

People who have poor credit quite often look into this option of no credit check auto insurance with the hope that since their credit will not be used against them, they can get much lower rates. While it is true that the removal of this factor from the underwriting process ought to help you as a consumer, it is also true that on average, these companies do charge more than traditional insurance companies utilizing credit based insurance scoring. Drivers should not think that they will get the same rates they'd be getting with an 800 credit score when they use these companies.

Regardless of what your credit score or personal situation might be, the best policy is always to compare quotes from different companies selling auto insurance without credit scores policies in your region of the country. If you have poor credit, it still pays to get some quotes from traditional insurers as well as specialists. Use the form at the top of this page for free car insurance quotes.


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