You never drink and drive, and you've never had a speeding ticket in your life, but your auto insurance premiums are still higher than you'd like. Your driving record isn't the only thing that insurers look at when setting your auto insurance premiums. You may be paying more for your car insurance because you can't get a handle on your credit. Could your bad credit drive up your car insurance premiums? In some cases, the answer is "yes."

What insurance companies consider when setting premiums

Auto insurance companies take a lot of factors into consideration when setting your premiums. Your driving record is a big factor, but it's not the only one. Your age, gender, driving habits, and location are all other important factors used to determine how much of a risk you are to insure. Another lesser-known factor used to determine your risk is your credit.

When insurers look at your credit, they aren't necessarily looking at your credit score, at least not in the same way that a lender would. Rather than using your credit score to determine whether or not you are a risk to insure, they look at certain aspects of your credit history, including your payment history, outstanding debt, and mix of credit. Not every insurance company uses credit-based scoring to determine premiums, and if your credit is good, using it can help you to get lower premiums. However, if your credit is bad, it can drive up your premiums considerably.

What you can do about your credit to improve your insurance premiums

Some credit problems are caused by circumstances beyond your control, such as unexpected debt from medical expenses or a job loss. Other problems are a direct result of poor debt management skills, and these are the kinds of problems that insurers feel make you a risky customer. If you can't keep a handle on your finances, you could be a risky driver, at least in the eyes of your insurance company.

If your credit is causing you to pay more for car insurance, there are some things you can do to reverse the damage and bring down your premiums, but it won't happen overnight. Start by checking your credit report for any problems or inaccuracies. If you see something on your report that isn't correct, contact the credit reporting agency to have it amended.

If your credit is bad, work on improving it. Focus on paying down debt, making your monthly payments on time, and avoid applying for new credit. By taking steps to improve your credit, you'll show that you are responsible and less of a risk for your insurers.

How to get better premiums from your insurer

Once you're confident that your credit has improved, ask your insurer to review your policy again. Provided you haven't exhibited any risky behaviors or moved to an area with higher premiums, you should find that your improved credit qualifies you for lower premiums. If not, ask your insurer  or sites like http://www.collinginsurance.com/ for details about what is causing the premiums to be higher. 

In addition to improving your credit score, look for other ways to lower your premiums to ensure you're getting the lowest premiums possible. Ask your insurance company about discounts for having multiple policies, such as your homeowners insurance or life insurance, with the same insurance company. You might also consider adjusting your policy to have a higher deductible. You'll pay more out of pocket if you have to file a claim, but it could lower your premiums substantially, saving you money in the short-term. 

If you work to improve your credit, you'll benefit in multiple ways. Good credit brings lower interest rates and more opportunities to borrow money, but it can also mean savings on your car insurance. Strengthen your credit, and enjoy lower auto insurance premiums as well as lower interest rates.