Can Missing Auto Insurance Payment Affect Credit Score?

Question: My auto insurance premium payments are charged to my credit card automatically. There were issues with this particular card and payment was missed. My insurer contacted me and I paid with another card. Does this non-payment affect my credit score?

Answer: Credit scores are based on your payment history. Every missed payment would be recorded if the credit rating company finds out about it. An unpaid credit card automatic payment would affect credit score. And it would further affect if the payment was refused because you reached your credit limit. How you use your credit facilities and how much credit you have are important components of credit score. For example, having several credit cards with large limits may work in your favor if large part of that credit is not used.

Generally speaking, a missed vehicle insurance payment would affect your credit score about 5 – 10 points. How it reflects to your insurance credit rating would depend on which calculation method your insurer uses. Most companies have their own methods. But they may look at the score in the ranges of perfect, good and poor that 5 – 10 points may not shake it unless it was on the border.

Answer 2: Hopefully you explained the situation to the company 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 that premium payments goes through without a hitch. Some companies may be quiet about it and quietly cancel your policy. They don’t have to monitor it unless they committed to giving you a grace period.

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

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