With car-buying season hitting full gear following impressive Memorial Day Weekend sales statistics, the personal finance website WalletHub today followed its 2015 Auto Financing Report and analysis of how auto insurance premiums vary by car type with an in-depth examination of the connection between our credit scores and the amount we pay in insurance premiums.
WalletHub obtained quotes from five of the largest auto insurance providers in the country for two hypothetical consumers who are identical save for the fact that one has excellent credit while the other has no credit. This enabled us to isolate for the role of credit data in insurance pricing and led to the following insights into the current market.
- Car insurance premiums in Virginia can fluctuate by 68% based on credit score.
- Farmers Insurance appears to be the company that relies on credit data the most nationally, with the WalletHub Scenario revealing a 62% fluctuation in premiums between a consumer with excellent credit and a consumer with bad credit. Geico seems to rely on credit data the least, displaying a 32% premium fluctuation.
- Credit data has the least impact on insurance premiums in Connecticut (15% fluctuation) and the greatest impact in the Michigan (115% fluctuation).
- In the average state, there is a 49% differential between the cost of car insurance premiums for a person with an excellent credit score and a person with no credit history.
- Progressive is the most transparent carrier about both the use of credit data in quote generation and the source of that credit data, scoring the maximum 10 points in this category. In contrast, Liberty Mutual – the lowest scoring provider – obtained a score of only 4.5.
For the full report and to find out more about how credit data affects insurance premiums in your state, please visit: http://wallethub.com/edu/car-