Credit Rating and Auto Insurance Alaska AK
Reader’s Question:
Does my credit rating have a direct impact on my auto insurance rates? Why I am assessed with different premium rates by different insurers in Alaska based on my credit rating?
Marissa
Juneau, AK
Thanks for asking Marissa.
Yes, your credit rating will have a direct impact on your auto insurance rates. Do you know that auto insurance companies use very complex algorithms to determine your premium rates? It is with this math that auto insurance companies in Alaska tells that people with better consumer credit are better risks than people who made bad choices in the past.
So how do auto insurance companies investigate your background through your credit? Why do different auto insurers charge you differently based on your credit rating? It could be because any two auto insurance companies could use different credit bureaus to determine your credit rating. The basic reason is that you don’t actually have one credit score, but three credit scores instead: that’s one from Equifax, one from Experian, and one from TransUnion. We know that these bureaus are competitors and they don’t share information. As a result, you might have incorrect information in one of them. For example, if one auto insurer uses TransUnion while another uses Equifax, and Equifax credit report inaccurately shows a bankruptcy in the past, then you will be charged higher by the auto insurer which uses Equifax. If your other insurance quote is from an auto insurer who gets credit record from TransUnion which is more accurate and does not show any delinquencies in your credit record, then you will be quoted a cheaper premium rate by this auto insurance company.
So watch your credit…and be sure to shop around before you purchase auto insurance policy. You never know which company uses which. Hope this helps!
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