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Why Your Credit Score Can Affect Car Insurance Rates by 50%

Most people are surprised to learn that their credit score can have a huge impact on the cost of car insurance. (See: What is a Credit Score)

Having a bad credit score can increase your car insurance rates by 20 to 50 percent.

But why does your credit score have such a large impact?

Several years ago, car insurance companies started looking into credit scores to see if there was any correlation with the number of claims.

They discovered that people with poor credit scores were much more likely to file auto insurance claims.

Consumers with the worst credit scores were almost twice as likely to file insurance claims compared to those with the best scores.

This is a huge difference!

If that weren't bad enough, they found that drivers with the best scores were involved in 40% fewer accidents.

If you have bad credit, there are ways to improve your score.

In addition, there are still a handful of insurance companies that don't use credit score as a factor. This is why it's so important to comparison shop, especially if you have bad credit.

You need to cast a net far and wide in order to "catch" an insurance company willing to offer the best rates for your particular situation.






3 Steps Every Car Buyer Needs to Take to Save Maximum Money

The key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:

Step 1 Get Prices From My Trusted Network

Select the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Select Vehicle to Get Local Pricing

Step 2 Get Prices From TrueCar / CarsDirect

TrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.

Step 3 Complete my Checklist

Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

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About The Author

Gregg Fidan Gregg Fidan is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.
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