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Clifford Said:

When buying auto insurance, why do they do a credit check?

We Answered:

It's like prior speeding tickets - insurance companies have found a direct corrolation between credit score, and claims paid out.

There haven't been any studies, to the best of my knowledge, WHY people with lower scores have more claims filed, and more paid out on claims - so anyone who says "it's because you don't maintain your car" or "its because you driver carelessly" is talking out of their hat (or, SHOW ME THE STUDY!!!).

But I have seen the charts with my own eyes!! That show, people with a credit score of 705, on average, have $1 paid out in claims for every $1 paid in premiums; and people with a 550 have $2.50 paid out for every $1 paid in premiums.

Insurance departments in just about every state allow credit score to be used as a rating factor, because the mathematical relationship is THERE, and is PROVEN.

Sorry, they really don't care about why.

Now, what you need to do, is get a copy of your credit report and clean it up!! MOST of the time, closing out all the unused, newer accounts can seriously increase your score - as it's not just about paying bills on time, but how many times you've applied for credit in the past six months, how many accounts you have open, balance due on accounts, available credit (lower those credit lines!!), and the average length each account has been open.

Yep, people who move from one credit card company to the other every year, getting the lowest interest rate, and always paying on time, have a WORSE credit score than someone with a couple late payments, that's had the account for 10 years.

Hope that helps.

Ian Said:

What does your credit score have to do with your car insurance premium?

We Answered:

It has absolutely NOTHING to do with your rates, but insurance companies use this as an excuse to charge you more, the theory being the crappier your credit is, the higher the risk you are in filing claims.

Toni Said:

Is my terrible credit rating going to affect my insurance premiums if I pay monthly?I?

We Answered:

Most insurance companies use credit as one factor is setting rates. I'm sure your premium will be higher because of your poor credit. If you've already been cancelled due to non-payment many companies will raise your rate further (because you're not responsible) or deny you completely.
I'm almost positive you will not be able to make payments, as you have a long record of not making them-whether you think its your fault or not.

Lauren Said:

What documentation is required for paying health insurance by credit card?

We Answered:

Yes. You wouldn't need to show proof unless you were examined or audited, and the credit card statements would suffice as proof of payment.