Many people wonder exactly what insurance companies use to determine their premiums. Premium costs are different for everyone and can stem from a variety of factors, like your age, your driving record, and where you live. Many people wonder if their credit has any effect on their car insurance prices. The unfortunate truth is that it does in most cases. Car insurance companies will look at your credit to determine how much of a risk you are to insure. The logic is that if you have poor credit, you might be less likely to make payments, so they’ll charge you more to cover any potential losses.

If you have poor credit, there are things you can do to mitigate the cost of your insurance. The first is to drive very safely and look for insurance companies that provide a discount for good driving. Even if the initial cost of your insurance is high, this can bring the total cost down and help show the insurer that you are trustworthy. Once you build up a reliable history of on-time payments and safe driving with your insurer, your costs may go down.

Another option is to look for insurance policies that are use-based. These policies determine the premiums purely by how much you drive and how good your driving record is, so your credit won’t factor into the overall cost. With these insurance policies, you can actually keep your premiums down by minimizing the amount you drive each month.

If you have poor credit, it’s worth it to take your time to really shop around for insurance policies. Get quotes from many different insurers before making a final decision to ensure that you’re getting the best deal possible. Look for companies that offer deals for new customers as well to cut down on costs.

An easy way to assess all of your options is to use an independent insurance agent. EZ Insurance of Austin, Texas helps customers find cheap auto insurance online. By comparing both local and national insurance, you have more choices when it comes to finding the perfect option for you.