Auto insurance premiums and your credit score

credit score auto insuranceDoes your financial history help to determine the size of your payments.

Depending on the state in which you live, you may discover that your credit score plays an important role in the calculation of the auto insurance premiums that you pay every month to continue your coverage.

Three congressmen have now proposed a bill to stop this practice.

Ban the Use of Credit Scores in Auto Insurance Act is the name of the bill, HB 6129, which would make changes to the Fair Credit Reporting Act so that your scores would no longer be able to be used to alter your premiums. The three congressmen involved are Reps. Bennie Thompson (D-Miss.), John Conyers Jr. (D-Mich.) and Hansen Clarke (D-Mich.).

They sponsored the bill which was referred to the U.S. House of Representatives Financial Services Committee. If it passes, it means that no matter which state you’re in, your credit score will no longer be an element in the calculation of your auto insurance scores. Instead, it will help to make certain that your rates are based on your responsibility as a driver and your skills behind the wheel, and not other factors that don’t alter the risk you present your insurer.

If you live in Hawaii, California, or Massachusetts, your auto insurance rates don’t include this data.

Those states already ban the use of credit history for auto insurance premiums calculations. But for the rest of the country, there will be a waiting period to see if the HR 6129 bill passes. At a time like this, when the economy is poor and even those who had been the most affluent are feeling the pinch, it is widely considered to be unfair to hold a person’s financial track record against him or her and increase payments based on circumstances that may have been out of their control.

One of the best ways to make sure that you’re paying the lowest premiums for the best coverage is to obtain a copy of your credit history – so that you know what you’re dealing with – and then obtain quotes from different insurers and perform a comparison.

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