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Car insurance secrets revealed

Consumer Reports finds companies basing rates on hidden credit score

SAN ANTONIO – You probably think the cost of your car insurance depends mostly on your driving record. But a Consumer Reports' exhaustive study of more than 2 billion insurance quotes at companies across the country found prices can increase dramatically because of your credit history.

The commercials tout low rates but don't tell you how they set those rates.

A two-year investigation found many major insurance companies base prices in part on a hidden credit score that can take into account things like what type of credit card you have or whether you've applied for credit recently.

"That car insurance credit score is different from a FICO score, and how it figures into your premiums varies depending on the insurer and your state," said Consumer Reports Money Editor Margo Gilman. "Companies use it to predict not if you'll be a good driver but whether you'll file a claim."

Consumer Reports compared rates for hypothetical drivers who are single with clean driving records.

In Texas, the average annual premium for those with an excellent car insurance credit score is $1,338. With a "good" score, it is $1,631, and for those with a "poor" score it's $3,426. That's a much higher premium than for those with an excellent score and a drunken driving conviction. In that case, the average annual premium is $2,435.

The research showed some insurers penalize people more for a poor credit score than others. For Texas drivers with a poor score, Amica Mutual charges $6,529, while GEICO charges $2,162.

A few states prohibit insurers from setting prices based on credit scores: California, Massachusetts and Hawaii.


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