Car insurance companies base their rates on the risk of someone getting in an accident or incurring other financial damages related to their vehicles.
The prices will be based on such factors as the driver's history of incidents, the age of the driver, the type of vehicle and location.
Insurance companies may also look into the individual's credit history.
They want to make sure the individual will make timely payments and be a responsible driver.
Credit history and risk of car insurance claims are directly related.
Even if an individual has a clean driving record, a poor financial history may result in a higher priced policy.
Different insurance companies take some factors into consideration while others may not.
Some may base their policy prices heavily on credit scores, others may place more importance on the age and record of the driver.
This is one reason that car insurance quotes can differ greatly.
It is also why it is particularly important to shop around for a policy that is right for you.
Looking at an individual's credit history is different than looking at their actual credit score.
Although the credit score will be taken into consideration, an "insurance credit score" may be more telling to the company.
This score will be determined by such factors as history of timely payments, age of customer, past history of loan inquiries, accumulated debt, and the cause of debt.
Insurance companies are legally allowed to look into an individual's credit history.
They want to protect themselves from large financial losses and will charge more for those who present a risk.
However, they are not required to inform someone of how much the credit score affected their car insurance quote.