|Question: Do I need to provide credit information on my auto insurance application?|
When you apply for an auto insurance policy, don't be surprised to find questions about your credit on the insurance company's application. In addition to the other information you provide, the company may use your credit information as part of its applicant-screening process. But are insurance companies being too nosy and intrusive when they request your credit information? Perhaps. Many lawmakers, consumer rights groups, and others certainly think so. However, many companies claim that they really need this information to properly evaluate your insurance application.
Believe it or not, there may actually be some truth to that. Statistics do show a link between a person's credit history and driving record. In other words, drivers with poor credit generally file more auto insurance claims than drivers with sound credit. How do you explain this connection? According to insurers, careless or irresponsible individuals tend to be that way in all areas of their lives, including both driving and finances. Based on this trend, an insurer may actually charge you a higher premium (or even deny you coverage) if you have shaky credit. Your credit information can also give an insurer a good idea of how likely you are to pay your premiums on time.
Insurers generally must follow specific guidelines when considering an applicant's credit history. Contact your state's insurance department if you have questions about the regulation of credit-based insurance scoring in your state.