You may be astounded to be told that one reason your auto insurance premium has increased is because of your credit rating. Do you think this is ethical or fair? I have my doubts about this practice, but insurers do have the right to take all reasonable steps to ensure that they charge you a premium commensurate with the type of risk you represent and credit rating is one way they are allowed to assess you.

If your credit rating is not good, you represent more risk as the insurer assumes that if you have a weakness in this are, you may behave erratically in other areas of your life. As many Americans struggle to pay mortgages and hold on to property in the face of the on-going shock waves from the most recent economic downturn, an increased auto insurance premium can be just one more blow.

Your insurance agent may not be able to tell you what your credit rating is; instead, they may only know what category you have been placed in for insurance purposes. If you feel there is something wrong here, you will need to get busy, but it can also be difficult to get complete credit rating information despite the many websites that claim they can get it for you for free.

Certainly, if you have been declared bankrupt in the last ten years, this is likely to be a matter of public record and easily accessible. It will definitely have an impact on your credit rating until you start to re-establish a good credit record and that is usually a costly business as lenders demand high interest, initially.

Other things that will impact your credit rating are things like the length of your credit record. So if you are a new graduated, you are not likely to have an extensive credit record.

The number of credit cards you have also counts. As does the amount of credit available to you and how often you have tapped into that credit in recent times.

If this makes you feel uncomfortable, I am sure you are not alone. That so much of an individual’s private business is easily accessible and used to make judgments about us bothers many people.

The credit rating game is a bit of a catch-22. If you have little or no credit record because you run a cash economy, you probably do not have a useful credit rating.

What can you do about it? Not a lot really. The best thing you can do is keep the number of credit cards you have to a minimum, pay your bills on time, and if possible in full, each month and in doing so avoid ruinous interest payments.

If you suspect that your auto insurer is assessing your risk level on the basis of an erroneous credit rating, challenge it. If you get nowhere, move on. There are plenty of auto insurers and some are more humane than others.

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