Your credit score is important in determining car insurance premiums. While you might think that healthy financial habits can get you easy car loans, your credit score also affects insurance premiums.
In this article, we will comprehensively discuss the ins and outs of getting auto insurance for drivers with bad credit.
Auto insurers consider people with bad credit to be high-risk customers because they tend to claim more often. Thus, if your credit score looks poor, you may find it difficult to find affordable insurance rates.
Experienced insurance experts Surex can help you find affordable rates even if you have bad credit. Let’s find out what your credit score has to do with car insurance premiums.
Why do auto insurers check credit ratings?
Well, an auto insurance policy is not a loan. So why do you think insurers would want to know your credit score?
In some Canadian provinces, auto insurers are not allowed to check the credit ratings of their customers. However, in other provinces, they may receive this score based on your consent. Your credit score speaks volumes about your financial habits. Thus, insurers can draw many conclusions about the level of risk you represent. The rule of thumb is that a higher credit score means less risk, and therefore you pay lower premiums.
On the other hand, a tarnished credit score indicates the possibility of missing out on a monthly insurance bill payment. Ultimately, your score determines your creditworthiness and therefore your risk profile.
As a rule, insurance companies carefully study various aspects of your credit history. This includes:
- The number of late payments in your account and the total number of payments made.
- Types of credit accounts include loans and credit cards.
- The loan you have taken against the total used limit.
- The amount of debt you already have.
Insurance Bureau of Canada (IBC) developed a code of conduct. This governs the rules on how car insurers can use your credit score. In addition, the code ensures that no insurer can cancel a policy due to bad credit. This guarantees adequate car insurance for people with bad credit.
Canadian regulations governing the use of credit scores by car insurers
The use of credit scores by insurers in Canada varies by province.
- When a company signs a policy in Labrador and Newfoundland, it is not allowed to use your credit score. They can access your criminal record or accident history. However, insurance premiums do not depend on your credit score.
- Alberta regulations require that the auto insurance company obtain your explicit consent before accessing your credit score. The potential client can even refuse consent.
- Provinces such as Manitoba and British Columbia do not have specific regulations regarding the use of credit histories to determine premium rates. In these provinces, car insurance is regulated by the government. So the car owner shouldn’t have any problems.
- If you live in Saskatchewan and Nova Scotia, insurers are free to view their customers’ credit scores. They can use whatever information they want while giving you a quote.
Can a good credit score help you lower your insurance premiums?
Of course yes. If you have a good credit score, you can give it to your auto insurer. In this way, you can save a significant portion of your premium that you might otherwise fork out. Over 85% of insurance companies in the US and Canada use credit scores to determine car insurance rates. So, if you are confident that you have a healthy credit history, why not use it to your advantage?
Even if your credit score is below average, it will have little impact on your premium. This is because most insurance companies use a set of parameters to determine your premiums. These include your age, driving history, whether you have completed a safe driving course, demographics, and other factors. Thus, car insurance for drivers with bad credit will not be too high.
If you are in a dilemma, check with insurance brokers. Experts can help you lower your auto insurance premiums.
Do you have a bad credit score? Here’s How You Can Reduce Your Insurance Premiums
Are you worried about paying high car insurance premiums for drivers with bad credit? Perhaps you live in a province where insurers have access to your credit history. There are ways around this and you don’t have to pay something exceptionally high.
1) Keep clean while driving
Insurers view your driving experience as a key factor in determining your risk profile. By having a clean driving record, you can greatly reduce this risk. With protective driving habits, you can avoid being convicted of a traffic violation. Refrain from distracting driving and speeding, and do not get into collisions. This will help you keep your auto insurance rates low.
2) Refuse unnecessary coatings
Review your copy of the policy from time to time. Look carefully to see if you have certain coverages that you can opt out of. Also, try linking your home and car insurance policies together with the same company. This will help you get lucrative discounts that will help you save money in the long run.
3) Pay more deductibles
pay more franchises can have a significant impact on low insurance premiums. However, take care of your budget, ensuring that the obligation to pay a higher deductible does not hit your wallet.
4) Do not provide access to a credit score
It may seem suspicious, but in some provinces of Canada it is completely legal. If you live in a province where the insurer needs your consent before viewing your credit score, you can refuse permission. Once your credit score improves, you can renegotiate the terms of your policy.
Car insurance against bad credit history in Canada – note
The best strategy for finding affordable car insurance is to shop around. Consult reputed insurance experts to find affordable policies. These professionals keep an eye on the most reliable insurers in Canada. They will find an affordable policy for you depending on your credit score, eligibility and requirements.
After all, don’t let bad credit ruin your affordable auto insurance plans. Under the professional guidance of experts, you will be able to choose the right coating for your car.