Can Missing Auto Insurance Payment Affect Credit Score?

These days we have so many methods of settlement that it is easy to get muddled up. Say, automobile insurance premiums are charged to one card automatically. Then, there was an issue with it and installment was missed. They contacted you and you settled with another card. Does this non-payment affect credit score? Let’s have a look at the implications and outcomes and consider sequence of events, as how quickly you reacted can be decisive.

They are based on money trail people leave behind. Every mishap would be recorded if the rating agency finds out about it. An unpaid premium would be considered like any other bill and would influence the score. And it would further affect if it weren’t made because the card limit is reached. How you use borrowing facilities and what is the outstanding balance against the maximum limits are important components of credit ratings. For example, having several cards with large limits may work in your favor if large part of those facilities isn’t used.

Generally speaking, a missed premium would affect the score about 5 – 10 points. How it reflects onto insurance credit rating would depend on which calculation method the carrier uses. Each has own methods. But they may look at it in the ranges of perfect, good and poor that 5 – 10 points may not shake it unless it was on the border.

One important point to note is that usually companies don’t report a one-off hiccup that has been quickly resolved. For example, realizing it has been missed and quickly clearing the arrears can be satisfactory for many. They may leave it at that and it doesn’t go any further. They only report prolonged and repeated arrears to agencies, which cannot do anything about it if they have no knowledge of it. That is why you need to stay on top of bills.

Consequences of Missing Vehicle Insurance Premiums

Hopefully you explained the situation and they are satisfied with it. Otherwise, they may not agree to installments next time and want you pay the full amount in advance. Where possible you need to make sure to settle premiums in a timely fashion. Some companies may choose to cancel the policy without giving notice. They don’t have to monitor it unless they are committed to giving you a grace period. You don’t want to be driving around with a lapsed coverage.

Policyholders with bad money management are highly advised to pay the full amount at the start and be done with it. It wouldn’t be prudent to take a chance on it. Car insurance is a simple contract and if you don’t make the due payments you break your end of the bargain.

Furthermore, most carriers would check the credit score before offering quotes or initiating coverage and before allowing any policyholder to set up an installment plan. Having a lower figure can result in higher auto insurance since it is one of the key factors affecting rates. Also, you may have to come up with the full amount upfront if you want to take the quote.