If you’ve never purchased Smyrna car insurance before, or if it’s been a long time since you’ve spoken with your Smyrna car insurance agent, you might be surprised to learn that your credit history plays a role in determining your rates.

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The fact is, however, that approximately 92 percent of all insurance companies nationwide use credit history as part of their formula for assigning insurance scores. There’s a good reason for that: multiple studies have proven that there is a strong correlation between a person’s credit history and their insurance risk.

What Your Smyrna Car Insurance Company Looks At

Your credit report is only used to establish that you are who you say you are and to look at how responsible you are with your financial obligations. Your Smyrna car insurance company does not look at, or even have access to, your race, religious preferences, disabilities, or any other information that could cause concern with regard to discrimination. In fact, only the people who will be handling the underwriting of your policy will even see your credit report.

Why Your Smyrna Car Insurance Company is Interested

When insurance companies first began using credit history as a part of their insurance score formula, some people expressed concern that it could discriminate against people who have suffered a devastating life event, medical or economic crisis, or who are in a low-income situation.

Because of this concern, the Federal Trade Commission ran a model study that took these factors out of the equation in order to look at what remained. What they found concluded that, even when these factors are removed, the connection between poor credit and insurance risk remains. People who have a history of handling their finances poorly tend to take more risks when it comes to driving, which translates to a higher risk for the insurance company.

In the interest of fairness, however, most insurance companies do forgive extenuating circumstances that lead up to a decline in credit. These may include a death in the immediate family, hospitalization of the individual or immediate family member, divorce, no-fault unemployment, or a catastrophic event that leaves the individual without a home. If your credit was very good up until a certain date and then declined after that, it will not go unnoticed or unconsidered.

What to Do if Your Smyrna Car Insurance Company Finds Negative Information

The best thing you can do is to review your credit report regularly—before your Smyrna car insurance company needs to see a copy of it. This way, you can dispute inaccurate information and have it corrected before it becomes a factor.

If the information is accurate, however, and you receive a higher rate because of it, try speaking with your Smyrna car insurance agent. If a poor report is due to an extenuating circumstance like listed above, your insurance company may not know about the event, and may be willing to reconsider your rates after receiving proof about it. In any event, regardless of your current credit status, it’s always prudent to work toward improving your credit as much as you can.