But one of the industry’s lesser-known qualifiers is a policyholder’s credit rating, with those having lower FICO scores generally being charged more than those having top ratings. According to the Consumer Federation of America (CFA), 95 percent of auto insurers use credit scores in their pricing of insurance policies. Not surprisingly, a CFA survey indicated that U.S. drivers reject insurer use of credit scores in their pricing of auto insurance policies by a greater than two-to-one margin. FICO ratings are typically used to judge a loan or mortgage applicant’s creditworthiness, with a score of 580 or less representing a “poor” credit risk and anything over 800 regarded as being “exceptional.”How much more will those having below-average FICO scores pay for car insurance? According to a study conducted by the personal finance website NerdWallet.com, auto owners having poor credit in seven states are being charged an annual average of $1,000 or more for coverage than those having good credit.

Source: Forbes May 24, 2017 19:30 UTC