Most states - North Carolina included - allow auto insurers to use a credit-based insurance score as part of their rating formula. This isn't your FICO credit score exactly, but it's derived from similar data: payment history, outstanding balances, credit age, and new inquiries.
Why Insurers Use It
The statistical basis is that people with lower credit-based insurance scores file more claims on average. Whether that's fair is a policy debate, but it's the standard practice at most major carriers, and it can significantly affect your premium.
How to Improve Your Rate
The good news is that improving your credit over time does improve your insurance rate, even mid-policy at some carriers. Actions that help: - Pay bills on time - Keep credit card balances low - Avoid opening several new accounts at once
Shop After a Credit Improvement
If your credit has improved substantially since your last policy was priced, asking your agent to re-run the rate or shop with other carriers can sometimes surface a lower premium without any other changes.
Some carriers weight the credit score more heavily than others. An independent agent shopping multiple carriers on your behalf can find the one whose pricing formula works most favorably for your credit profile. The NC Department of Insurance has specific rules governing how credit-based insurance scores can be used by carriers writing auto policies in North Carolina. Get a free auto insurance quote and let IronHaven shop across 25+ carriers for you.
