Car Insurance companies check your credit

If your credit is bad you may find your self in a position where things cost you more then others. A popular term for that is the Matthew Effect which simply describes the notion “the rich get richer and the poor get poorer”. Sorry to be so dramatic, but that sure applies when it comes to car insurance.

Many car insurance companies look at your credit history and if there are significant problems, they will wipe away the discounts you could have enjoyed with a clean history, The reason why car insurance companies do that is simply because they associate good credit with less future claims. Apparently people who know how to handle their finances are more responsible and so are less likely to cause situations involving claims. The positive news is that not all companies use the credit criteria, so keep checking for cheaper quotes and once you commit to a quote, keep paying the premium on time, every time.