Bad Credit Raises Auto Insurance Premiums in Texas

Your credit score is possibly the most important asset you have. It affects your ability to get a new job and a new home, and it can even impact the amount you pay for car insurance in Texas. And in order to get the most value out of your dollar, it can be well worth the effort trying to find cheap auto insurance in Florida here.
The Dallas Morning News recently released a rate analysis and the results were startling. People who have bad credit pay an average of 39 percent more for auto insurance in Texas. Those who use State Farm have to pay even more for their credit mistakes. The major insurer charges Texans with bad credit an average of 51 percent more for auto insurance premiums.
The question is why do people with bad credit have to pay so much more in the state of Texas?
What Bad Credit Says About You
At one time, auto insurance companies determined rates based on the person’s age, gender, and driving record, but that changed approximately two decades ago. At that time, the Fair Isaac Corporation (FICO) determined that people with low credit scores have a higher risk of filing insurance claims. That is a correlation, not causation, but it still provides insurance companies in Texas with the justification they need to hike up cheap car insurance quotes Texas offers.
This justification is so great that many insurance companies give it more weight than an accident on a record. That means if you have a clean driving record but bad credit, you will likely pay more than someone who has pristine credit and an accident on his record.
Getting the Best Deal
The state of Texas does have consumer protections in place to prevent companies from using credit scores unfairly. While an auto insurance company is well within its rights to make you pay more if you have defaulted on loans, you are protected if your score went underwater due to medical bills. If you feel that an auto insurance company is using your rates unfairly, contact the insurance company. If that does not work, file a complaint with the Consumer Financial Protection Bureau.
In addition, shop around if you have bad credit. Some auto insurance companies put more emphasis on bad credit than others, so you might still be able to find a deal, even if your credit is less than stellar.
Finally, work on repairing your credit before purchasing auto insurance. Put your debts in order, with the lowest one first. Pay it off, and then go up to the next one. This is a quick and easy way to reduce your credit burden. The less you owe, the better your credit score will be so you will pay less for car insurance in Texas. As an added bonus, you will also get a better rate on your next auto loan when you have good credit.
With so many factors that go into scoring auto insurance in Texas, it can feel like an uphill battle to get a good rate. The good news is you do have some control. Work on improving your credit scores before shopping for rates. Then, you will have some manageable rates to choose from when purchasing auto insurance in Texas.