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Car insurance surges by up to £1,100 if you have poor credit score

Patrick Kelly
Sep 5, 2019


Your car insurance could surge by up to £1,100 if you have a poor credit score.

New research from credit score company ClearScore, which analysed price comparison quotes for more than 9,300 people, unearthed the previously secret reason why your quotes may be so high.

It found that those with a high credit score of between 600 and 700 pay £397 on average for an annual policy paid upfront, according to The Sun.

But those with a low score of between zero and 100 typically pay £1,494 for the same policy.

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And it seems your premiums fall as your credit score improves, as those with a score of 300 to 400 were quoted £936 on average, while those with a score of 500 to 600 saw an average cost of £501.

Despite this, a separate survey by ClearScore found that 75 per cent of drivers were unaware that their credit score is linked to their car insurance premium.

And just 9 per cent said they've taken steps to boost their scores in order to lower their premiums.

Industry trade body, the Association of British Insurers (ABI) has confirmed that insurers can use credit scores to determine prices but adds that this is up to the insurer and there will be lots of other factors involved.

With ClearScore's data, for example, people were chosen at random, so age, location, job, driving experience and no claims discounts will also have had an impact on quotes.

But despite insurers checking your file, this is likely to only be a soft search meaning it won't impact on your score itself.

Typically, the only time a car insurer will carry out a hard search is when you opt to pay for car insurance on a monthly basis as this is effectively a loan.

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This means it could affect your score and other lenders will also be able to see it.

Justin Basini, co-founder and chief executive of ClearScore said: "A lot of us will cut down on the miles we drive or add another driver to a policy to reduce our car insurance premiums.

"Yet very few of us will take steps to improve our credit score, as most are unaware the elements within it can affect the price we pay for insurance.

"But with premiums on the rise, now is the time to take control over yours - whether it’s shopping around at renewal to find the best deal or improving your credit score."

Malcolm Tarling, spokesperson for the ABI, added: “Motor insurance is fiercely competitive, with different insurers taking into account a wide range of factors which they see as relevant to the risk.

"Your credit rating may be relevant, where, for example, you are paying for your motor insurance in monthly instalments.”

See the boxes above for tips on boosting your credit score and cutting your car insurance bills.

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