You have a clean driving record but poor credit. Your neighbor has a clean driving and excellent credit.

More than likely, your neighbor pays substantially LESS in auto and home insurance premiums.

Where are the good old days when your biggest worry was getting a speeding ticket and going to driving school to keep it off your record?

The good old days are long gone.

It is estimated that 90% of all insurance companies have implemented credit scoring when it comes to calculating your auto (and home) insurance premium.

What makes a good or bad credit  score? The factors can be many and vary from company to company, making the issue even more confusing. What we do know is this: your credit score probably carries more weight in determining your premium than any other single factor.

When you apply for a car insurance quote, the first item the rating system checks is your credit score. You are placed into a specific auto tier based on your score, then all the other factors are figured in: your zip code, type of vehicle you drive, age, driving record, and discounts.

Insurance credit scoring is probably here to stay. Several states, such as Texas, have taken the issue to court. At this time, the insurance companies have been able to validate enough statistics to show a relationship between bad credit scores and higher claims frequency. Why that relationship occurs, no one has been able to substantiate. The common theory is this - a person who takes greater care to build an excellent credit score likely takes greater care in other areas of their life, including driving habits.

The best advice is to work hard to improve your own score. Here are a few tips:

Do not have too many open credit accounts. You may have ten different credit cards (Visa, Mastercard, American Express, department store and gas cards, etc)- all with ZERO balances, but it still may lower your score. Too many open accounts is apparently bad. And do not max out your credit card. For example: if you have a credit card with a 10,000 credit line and 9,000 used up, that also lowers your score.  Even if you pay your card on time,  having a  balance  anywhere close to your maximum credit line hurts you.

Trim the number of credit cards you carry to one or two (keep those with the best interest rate). Pay your balances down, and pay on time. Then go search for a lower insurance rate.

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