Inquiries can make up as much as 15% of your credit score. This makes it an easy math problem. Can you accept the results?

This makes no sense.

Insurance companies have no reason to set rate classes based on something that has nothing to do with your driving record. What in the world would they gain by chasing away some customers unless they were high risk customers??

And it makes perfectly good sense, also. Both are caused by risk-taking behavior.

Ok, so poor credit = poor driving. Show me the data.

It doesn't have to be all drivers with poor credit driving poorly, just some. The insurance business is a numbers game, so even if a small number of lower fico drivers have an increased tendency towards car accidents (due to more risk taking behavior or disregard for rules), it pays for the insurance company to use credit scores as a factor.

This is exactly correct. It's called the law of large numbers. The simplest explanation of how it works is mine and Bill Gates average net worth is 20 billion (� a few billion) but if you average in everyone and remove the outliers my average net worth is back to something more real.

Cigarette smoking works the same way, though the science is not as disputed now. Old argument, cigarettes don't cause cancer (specifically, you can’t prove they cause cancer), however the correlation between smoking and lung cancer was just too high to be ignored forever.

As someone above mentioned, it's not that someone with a lower score will have an accident; it's that they're more likely, statistically, to have a claim, using the law of large numbers. So while one particular person with a low credit score would not have a particular claim, the vast majority of people with similar credit scores will.

This has nothing to do with data, though I'm sure it does exist. This is simply those evil actuaries picking on the little guy with their statistical mumbo jumbo.

Under competition, it does actually lower rates for those with higher credit scores. The more factors used to identify risk, the lower the rates are for those who aren't identified as riskier (b/c more high risk drivers are removed from their group).

It is called adverse selection in the insurance business. There are people who can't make car or mortgage payments who burn them up to get out of their financial responsibility. It is a statistical reality.

People with bad credit also get insurance when they are required to, like when they have a claim to file, their license is due for renewal, they are getting a new job or they are buying a car. And then surprise, surprise, they don't pay the bill and it lapses or cancels.

People with bad credit are more likely to be involved in a hit and run.

People with bad credit are more likely to steal, not hold a job, get drunk and drive.

Most people with bad credit are irresponsible, that is why their credit is bad.

Get your Free CLUE Report on this one..go to Choicetrust.com

yep, I believe that, just by looking around the town I live in

this was from http://www.kiplinger.com/features/ar...dit.html#auto:

The Texas Department of Insurance conducted its own study in 2004 to see if there really was a correlation and came to the same conclusion. After studying the claims records of two million insurance policies, the insurance department found "the difference in claims experience by credit score was substantial," according to the regulator's report. The 10% of policyholders with the worst credit scores had 1.5 to 2 times more claims than the 10% of policyholders with the best credit scores. Drivers with the best credit scores were involved in about 40 percent fewer accidents than those with the worst credit scores.

I'm all for it. It will lower my rates because I have good credit scores.

Carrying that much revolving debt will not make your credit score look "good". I've read anecdotal evidence that having small balances reporting may help credit score, but we're talking in the range of 1%-5% of available revolving credit, which can easily be accomplished by just using credit cards for monthly expenses anyway.

Actually, I don't believe the insurance companies ever claimed there was a correlation between credit score and driving ability or number of accidents. As the Texas Department of Insurance study confirmed there is a corrleation between credit score and number of claims, those with lower credit scores tend to file more insurance claims.

I did it and my score jumped 15% within 60 days. So it does work, maybe not for you, but it did work for me.

I'm a longtime USAA car insurance policy holder so this is good news , particularly since I'm getting ready to apply for my third AA credit card in order to rack up miles!