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If you have poor to bad credit, it is likely that you will be unable to get the lowest lowest car insurance rates, even if your driving record is spotless. And car insurance companies have no obligation to inform you if your credit rating will get in the way of good car insurance rates. Surprised? You are not alone. Most people are not aware of this.

The logic behind it? Well, auto insurance companies argue that studies have shown that customers with bad credit are much more likely to file insurance claims. This makes them more risky and insurance companies feel obliged to charge higher rates. A customer’s credit rating is just one of many criteria they use to establish car insurance rates for the customer. There are many more factors that the companies consider. Credit is just one that most people would not guess.

Auto insurance companies say that a credit report is a good predictor of risk. The assumption is that a person with bad credit would tend to be more irresponsible, since they have demonstrated irresponsibility with their credit and would likely also be irresponsible with their driving habits. This is the assumption. We all know that this is not true for everyone, and that individuals circumstances are unique. Many people have bad credit because of divorce, being laid off from a job, serious illness, and is absolutely no reflection on their level of responsibility. Maybe in this economic turndown people will reconsider judging others with bad credit.

When you are applying for auto insurance, be sure to ask your insurance agent or the company you are dealing with what specific factors will be considered when they determine your insurance rates. If they tell you that your credit history is one of the factors and you know that your credit history has issues, you may want to keep on shopping with another insurance carrier.