Chris D. Hefty
Will Bankruptcy or Bad Credit Raise My Car Insurance Premium?
As an experienced bankruptcy attorney in Loveland, Colorado, I often work with clients who have experienced large hits to their credit scores.
Unfortunately, bankruptcy does negatively affect your credit score. One externality of this is the rise in car insurance premiums.
There are many factors that can negatively affect your credit score, including things like late payments, outstanding debt, bankruptcy, and new applications for credit.
According to a recent article from CNN Money, about 40 percent of every consumer’s bottom line score will be driven by whether or not you paid your credit obligations on time. This is when applied to credit-based insurance rates.
Being financially responsible (paying bills on time and minimizing debt) will help your car insurance premium go down.
Many believe basing car insurance rates off a person’s credit score is not fair to the customer because they so largely affect low-income drivers. Some states, like California, Massachusetts, and Hawaii, have banned insurers from using credit scores to determine car insurance rates.
Many clients I speak with do not realize their bad credit scores are affecting their car insurance rates. In fact, the Government Accountability Office found in 2005 that a majority of the U.S. population doesn’t know their credit score impacts their rates.
Other variables insurance companies use to determine car insurance rates include gender, age, and driving records.
If you have any questions about how bankruptcy or how your credit score may affect insurance premiums, or are considering filing for bankruptcy, please feel free to contact my Loveland or Fort Collins office for help. I am available to answer any questions you may have.